Over at the AJC, James Salzer reports that for the purposes of collecting sales tax, for the next six months the price of gasoline is $2.946 per gallon. That’s despite pump prices falling below $2 in much of the state. Why? Because instead of figuring out what the tax is at the time you buy that gas, the price for the purpose of calculating the sales tax is fixed every January and July for the next six months.
In July, 2014, Governor Deal decided not to raise the sales tax price because gas prices were higher than expected The sales tax price remained frozen at the beginning of this year because prices are lower than expected. The volatility in the price of gas can have a big effect on the revenue for the DOT. On Tuesday, new DOT Chief Russell McMurry told lawmakers at a budget hearing that DOT would expect to lose around $86 million over six months if the sales tax price was lowered to match the retail price.
What really caught my eye in the Salzer story, though, was this:
So instead of paying a 4 percent tax on $2 per gallon at the pump, consumers are paying 4 percent on $2.946 per gallon. On 10 gallons of gas, the difference is about 36 cents.
That only tells part of the story.
In reality, consumers are paying between a 6 and 8 percent sales tax on gasoline due to county SPLOSTs, E-SPLOSTs, HOST or MOST taxes. In Fulton, DeKalb and Clayton counties, there’s 1 percent for MARTA, and in the regions that passed the 2012 TSPLOST, there’s 1 percent for transportation. That means on a ten gallon gas purchase, consumers are paying around 76 cents more than they would be expected to.
Here’s yet another way of looking at it. With the sales tax rate locked in at $2.946 per gallon, the average consumer is paying 28.1 cents in Georgia taxes per gallon, including the 7.5 cent per gallon excise tax. Of that, the DOT actually gets 16.3 cents to pay for maintenance and construction of roads and bridges. That’s the excise tax, plus 3% from the state sales tax. The other “penny,” plus the county sales taxes go elsewhere. Drop that to the $2 per gallon you’re actually paying at the pump, and the numbers are 21.54 cents vs. 14 cents per gallon. For these examples, I’m assuming a 7% combined state and county sales tax rate, and I’m ignoring the federal excise tax on gas of 18.4 cents per gallon.
One final thought: If you drove a vehicle that gets 25 miles per gallon 15,000 miles last year, you paid $168.60 in state gas excise tax and sales tax, based on the numbers I used in the preceding paragraph. Of that, $97.80 went to the state DOT, and $70.80 went elsewhere.