Georgia’s governor, Brian Kemp, has taken action to provide relief to the state’s residents in the face of soaring fuel prices. On Tuesday, he signed an executive order suspending state taxes on gasoline and diesel fuel, citing a legal emergency due to the rising costs. This temporary tax suspension, amounting to 31.2 cents per gallon of gasoline and 35 cents per gallon of diesel fuel, will be in effect from Wednesday and will last until October 12.
This move follows a prior tax suspension that lasted for ten months, from March 2022 to January 2023, resulting in an estimated loss of $1.7 billion in state revenue, approximately $170 million per month. Georgia’s financial stability, with a substantial rainy day fund and roughly $10 billion in surplus state funds, allows it to absorb this revenue reduction without significant strain. Moreover, the state is expected to maintain a multibillion-dollar surplus for the current budget year unless revenues see a substantial decline.
Governor Kemp’s decision to suspend the gas tax serves not only to alleviate the financial burden on Georgia residents but also to shift the political conversation in the state. Recently, the focus had been on a grand jury’s indictment of former President Donald Trump and 18 others for their alleged attempts to overturn Georgia’s 2020 presidential election results. Despite pressure from pro-Trump factions within the Republican Party, Kemp has chosen not to retaliate against the prosecutor, highlighting the divide between him and these forces.
By implementing the gas tax rebate, Kemp can redirect attention towards his efforts to cut taxes. He argues that these cuts will help Georgians combat inflation, even though many economists contend that injecting more money into consumers’ pockets can contribute to higher prices. Nonetheless, overall inflation in the United States has been on the decline in recent months, with August data showing a 3.2% increase in consumer prices from the previous year, down from the 9.1% peak observed last year.
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Kemp’s reelection campaign in 2022 was marked by promises to reduce gas, income, and property taxes, setting himself apart from Democratic President Joe Biden. He stated, “From runaway federal spending to policies that hamstring domestic energy production, all Bidenomics has done is take more money out of the pockets of the middle class,” emphasizing the need for relief for hardworking Georgians.
While Kemp has encouraged state agencies to propose additional spending using surplus funds, his latest action suggests that further tax cuts are his preferred method to manage the surplus. This underscores the continued significance of gas prices in Georgia’s political landscape, even as the state actively seeks to attract electric vehicle manufacturers.
In response, Ellie Schwartz, a spokesperson for the state Democratic Party, praised President Biden’s efforts, stating that his policies have led to lower inflation, low unemployment, and rising wages in Georgia. Schwartz emphasized that while Kemp has a $5 billion budget surplus that he has yet to invest in the state, Democrats are focused on creating jobs, reducing costs, and building an economy that benefits working families.
Under state law, Kemp can continue suspending taxes as long as state lawmakers approve the action when they convene next. The previous tax suspension had initial support from lawmakers, and Kemp extended it seven times during his campaign against Democrat Stacey Abrams. State House Speaker Jon Burns expressed his support for the move, indicating that Kemp is likely to receive legislative backing for the tax break. Lawmakers are scheduled to meet again in January.
The executive order suspends taxes on wholesalers, and it may take a few days for the tax relief to reflect in pump prices. As of Tuesday, Georgia drivers were paying an average of $3.57 per gallon of unleaded gasoline, which was lower than the national average of $3.84. Diesel prices in Georgia averaged $4.35 per gallon. While gasoline prices have increased from $3.24 a year ago, they remain competitive compared to other states.
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It’s worth noting that pump prices also include federal taxes, with 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel fuel. Despite the recent extension of oil production cuts by Saudi Arabia and Russia, AAA reported that national gasoline prices were trending downward.