How the heck is that possible? Alabamas gas tax is 10.5 cents a gallon more (18 cents). Tennessees is 12.5 cents more (20 cents a gallon).
Brace yourself. If the actual price of the fuel component keeps going up someday Georgia could be battling California for the honor of having the highest gasoline prices in the nation. Actually, Georgia could never top California ... but it could come pretty close.
This is because Georgia is one of the comparatively few states that levies a sales tax on each gallon sold in addition to the motor-fuel tax. The fuel tax
(7.5 cents) is on the gallon. The sales tax is levied against the price (in the $2.90-$3.00 range this morning).
AND, NOT ONLY is the state sales tax applied (four cents) but so is any local-option sales tax, SPLOST penny and school penny. Greater Rome has all three running, hence for every gallon bought in Floyd County at $3 theres roughly 21 cents in sales tax being applied. Tank hold 20 gallons? Your sales tax will be $4.20 on that fillup.
Isnt it clever how this isnt broken down at the pump?
Theoretically, if gasoline prices continue to climb the sales tax take will just add fuel to the speed with which the pump price escalates. Gasoline is roughly a dollar and a half per gallon more than a year ago. Your tax per gallon has thus gone up 10 to 11 cents (in Floyd County).
Alabama and Tennessee, not having this sales-tax escalator built in, thus wind up charging less at their pumps for the same gallon. Alabamas gasoline tax is still the same 18 cents it was a year ago. Georgias total tax is 28.5 cents for the same gallon (in Floyd County; it would vary depending on the size of the local sales taxes).
IF THE PRICE of gas goes to $4 a gallon, then in Floyd County the gas tax would total 35.5 cents.
If it ever matches the price in Europe (about $5.50 a gallon) the tax becomes 46.5 cents.
At that point, by the way, the pump price in Alabama could be 28.5 cents less than here. Theyd still be at 18 cents compared to our 46.5 cents.
But California would still be king. Thats because, on top of an 18-cent fuel tax they levy a 6 percent sales tax on the dollar. Illinois might beat them, though. It has a 6.25 sales tax. Other states that tax each dollar spent on gasoline: Indiana, Hawaii and New York.
This is why state officials have been happily talking about the increase in gas tax revenues. For Alabama to get more taxes from gasoline, more has to be sold. In Georgia if the same amount is sold as in the past, but the pump price has gone up, the revenues go up. Indeed, if $1 gasoline goes to $2, Georgia nets twice as much from this side of its tax equation. If it goes to $3 (as it just has) the state gets three times as much.
OF THAT SALES tax collection, by the way, three of the state-assessed pennies from each dollar go into the dedicated highway fund and thus can be applied to new construction (which explains why the state recently announced it will have about $30 million extra this year for new bridges and such).
The local-option portion goes into the specific funds to pay for general county/city government, for the new health-department building or for Pepperell High.
Some states have started moving to mitigate some of this upward pressure. For example, Hawaii (with a sales tax) is trying to control the wholesale price through government regulation (a generally horrible concept usually seen only in times of war). Florida actually waived half of its 16-cent fuel tax during August. North Carolina is considering legislation to index its gas taxes to inflation.
Nothing like this has yet surfaced in Georgia, although the state could be heading for a real problem if the upward cost pressures continue well, not the state really, since it would be richer, but certainly the states motorists whose wallets would be lightened at an accelerating pace.
AT MINIMUM, this entire scenario should renew consideration of whether Georgias gasoline tax mechanism needs repair. The 7.5-cent fuel tax is too low, which is why the state constantly has to borrow money to build highways. The sales tax on gasoline has always secretly made up some of the difference and now is turning into a gold mine for the bureaucrats.
Wouldnt Georgians be better off with a higher, but fixed, per-gallon fuel tax of, say, 20 cents with no sales tax on gasoline? The state would have a more predictable revenue stream for road construction and repair and get this at current prices Floyd Countians would actually be paying about 8 cents per gallon less at the pump.
Raise the tax in order to cut the tax. Now, that would be some high-octane thinking