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Thursday, November 3, 2011 - 12:38pm

Tax Reform Remains Hot Topic

Conservative policymakers renewed their push for tax reform Thursday at a forum organized by the Georgia Chamber of Commerce. Elected officials and business executives touted lifting an energy tax on manufacturers, but it's unclear how the state would replace the lost revenue.

Georgia manufacturers pay a sales tax for energy used during the production process.

A state council charged with reforming the tax code recommended eliminating the tax last year. The state legislature failed to enact the idea, but many continue to say cutting the tax would spur investment by manufacturers.

Roy Bowen, head of the Georgia Traditional Manufacturers Association, says cutting the tax would encourage firms already in Georgia to expand, and could convince manufacturers out of the state to open a plant here.

“Georgia remains non-competitive with its neighboring states and nearly all states by taxing energy used in manufacturing because energy is second only to labor and in some cases exceeds the cost of labor in the manufacturing process,” he told lawmakers, lobbyists and others at the Atlanta event.

Georgia is one of few states that taxes energy used during manufacturing.

State fiscal economist Ken Heaghney says the tax generates between $150 million and $175 million annually.

“It’s not a huge number but it’s not a small one either and when you’re making budget decisions, at least in the short-term, funding for other activities would have to be reduced by about that amount,” he said during a break at the conference.

Georgia's total state budget is about $18 billion. Critics say eliminating a tax won't help Georgia raise much-needed revenue.

While supporters don’t have a projected value of cutting the tax, they say company investments would outweigh revenue lost.

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