ATLANTA (AP) — Georgia’s governor is again suspending state taxes on gasoline and diesel and declaring a legal emergency because of higher prices.
Gov. Brian Kemp signed the executive order Tuesday morning. The suspension of taxes on 31.2 cents per gallon of gasoline and 35 cents per gallon of diesel fuel begins Wednesday and lasts through Oct. 12.
The Georgian government foregone an estimated $1.7 billion in revenue during a previous suspension over a 10-month period from March 2022 to January 2023, about $170 million per month.
Georgia can easily afford to go without cash, which is mainly used for road construction. Not only is the account full for a rainy day, it also has about $10 billion in additional cash surplus in government accounts. The state is also likely to run another multibillion-dollar surplus in the fiscal year that began July 1, barring a sharp decline in revenue.
The move also allows Kemp to shift the political conversation in the state, which has been driven by a Fulton County grand jury’s indictment of former President Donald Trump and 18 others for attempting to overturn the results of the 2020 presidential election in Georgia was claimed. Kemp rejected attempts to retaliate against the prosecutor in the case, despite an outcry from the most pro-Trump elements of the Republican Party, underscoring the rift between Kemp and those forces.
The gas tax rebate allows Kemp to talk about his tax-cutting efforts instead. He says they’re an attempt to help Georgia residents fight inflation, even though most economists say more money in consumers’ pockets actually leads to higher prices. Overall, inflation in the United States has eased in recent months. August inflation data showed that overall consumer prices rose 3.2% from a year ago. That was up from a 3% annual increase in June, but well below last year’s peak of 9.1%.
Kemp successfully pushed for cuts in gasoline, income and property taxes in his 2022 re-election victory, contrasting himself with Democratic President Joe Biden.
“From out-of-control federal spending to policies that hamper domestic energy production, Bidenomics has simply pulled more money out of the pockets of the middle class,” Kemp said in a statement Tuesday that accompanied the executive order declaring a state of emergency. “While high prices continue to strain family budgets, hard-working Georgians deserve real relief.”
Kemp told state officials they could propose higher spending with Georgia’s surplus funds, but Tuesday’s action shows that further tax cuts could be Kemp’s preferred way to soak up the extra money. It also shows the continued political power of gasoline prices, even as Kemp pushes hard and provides state incentives to attract electric vehicle manufacturers in Georgia.
Biden is delivering lower inflation, low unemployment and rising wages, said Ellie Schwartz, a spokeswoman for the state Democratic Party.
“While Kemp sits on a $5 billion budget surplus that he refuses to invest in our state, President Biden and the Democrats are investing in Georgia by creating jobs, cutting costs and building an economy that works for working families.” Schwartz said in a statement.
Under state law, Kemp can continue to suspend taxes as long as state lawmakers ratify the measure at their next meeting. The previous suspension was originally passed by the Legislature, with Kemp extending it seven times as he campaigned against Democrat Stacey Abrams.
House Speaker Jon Burns supported the move, meaning Kemp is likely to get the legislative support he needs to confirm the tax break. The legislature’s next session is scheduled for January.
“I applaud Governor Kemp’s suspension of fuel taxes to keep our people and our economy running despite Washington’s inaction as fuel prices rise,” Burns, a Republican from Newington, said in a statement Tuesday.
The order suspends taxes for wholesalers and will likely take a few days to take effect on pump prices.
Drivers in Georgia paid an average of $3.57 per gallon for unleaded gasoline Tuesday, according to motorist group AAA. That was the 11th lowest amount of any state and below the national average of $3.84. The average diesel price in Georgia was $4.35 per gallon.
Gas prices in Georgia are higher than the $3.24 drivers paid a year ago. In June 2022, prices peaked at $4.50 per gallon.
Pump prices also include a federal tax of 18.4 cents per gallon on gasoline and 24.4 cents per gallon on diesel.
Nationally, AAA said last week that gasoline prices would fall even as Saudi Arabia and Russia extended oil production cuts through the end of the year, driving up prices.