Overview of the Transportation Funding Act of 2015
One of the most significant bills enacted by the Georgia Legislature in 2015 was the nearly billion-dollar Transportation Funding Act of 2015 (HB 170). A key provision of the bill was a change in Georgia’s gasoline tax, taking effect on July 1.
Georgia’s Previous Gas Tax Structure
Before the change, Georgia had a two-part gas tax:
- 7.5 cents per gallon excise tax
- 4 percent state sales tax
Additionally, gas was also subject to local option sales taxes, which added another 3 percent in most counties.
Drawbacks of the Previous System
- Fluctuating Revenues: Tax revenue fluctuated with gas prices, making transportation planning difficult.
- Impact on Consumers: Taxes increased when gas prices rose, adding further strain to family budgets.
New Gas Tax System Effective July 1, 2015
Beginning on July 1, 2015, Georgia replaced its existing gas tax system with a pure excise tax of 26 cents per gallon.
At gas prices of approximately $2.50 per gallon, this 26 cents per gallon tax was roughly equivalent to the taxes under the old system.
- Old system breakdown at $2.50 per gallon:
- 7% (4% state + 3% local sales tax) of $2.50 = 17.5 cents
- Add 7.5 cents excise tax = 25 cents per gallon total
Media Reports on the Tax Change
Despite the mathematical equivalence at current prices, media outlets reported this as Georgia’s “first gas tax increase since 1971” and warned that “drivers should expect around a 6-7 cent increase” when filling their tanks. These claims appeared surprising, given the tax change should have resulted in little to no change at current prices.
Examining the Impact Through Data
Using data from gasbuddy.com and AAA’s Fuel Gauge Report, an analysis was conducted to assess whether media reports of a tax hike were justified.
Methodology
- Collected average gas prices in Georgia and its five neighboring states.
- Compared data for June and July, the months immediately before and after Georgia’s tax change.
Reason for Comparison
- Gas demand is highly inelastic; therefore, gas taxes are typically passed on to consumers through higher prices.
- If Georgia’s change was indeed a tax hike, there should be an observable increase in Georgia’s gas prices relative to neighboring states.
Conclusion
The accompanying data table (not provided here) shows these comparative averages to assess the validity of the tax hike claims.
Frequently Asked Questions
What was the main goal of the Transportation Funding Act of 2015?
The main objective of the Transportation Funding Act of 2015 (HB 170) was to stabilize and enhance Georgia’s transportation funding by restructuring the state’s gas tax system to ensure more predictable and sustainable revenue.
How did Georgia’s gas tax change under the new law?
As of July 1, 2015, Georgia eliminated its previous dual tax structure, comprising a 7.5-cent excise tax and a variable sales tax, and replaced it with a flat 26 cents per gallon excise tax on gasoline.
Why was the old gas tax system considered problematic?
The previous system caused fluctuating revenues because it was partially tied to gas prices. This unpredictability complicated transportation planning and placed additional financial strain on consumers during periods of high fuel prices.
Did the tax change result in higher gas prices for consumers?
Although the new tax was mathematically similar to the previous taxes when gas prices were about $2.50 per gallon, media outlets reported it as an increase. However, comparative data with neighboring states was analyzed to determine if there was a genuine price impact.
How was the tax change’s effect measured?
Researchers compared Georgia’s average gas prices to those in five neighboring states before and after the July 1 change, based on the principle that inelastic demand typically leads to tax pass-through to consumers. The analysis aimed to identify whether Georgia’s relative prices increased.