What Georgia’s gas tax suspension means for drivers and for state revenue

Georgia’s motorists got a reprieve from the surging Iran-war-driven gas prices when Gov. Brian Kemp suspended the state’s gasoline tax.

The immediate effect of the suspension was a drop from prices that were in the $3.80s for regular unleaded in the middle of last week.

Today’s state average is $3.65, according to AAA’s Fuel Prices page for Georgia. The national average this morning is about $3.98. Cobb County drivers pay an average of about $3.70.

But how does that suspension effect the state’s revenue, and what programs might be affected by the drop?

Capitol Beat reports that Georgia’s temporary suspension of the state motor fuel tax will reduce state revenue by roughly $400 million over the two months leading up to the state’s primary elections.

The tax is about 33.3 cents per gallon on gasoline and 37.3 cents on diesel.

The tax is normally collected at the wholesale level and passed along to drivers in the form of higher pump prices. When the tax is suspended, that revenue no longer flows to the state, shifting those dollars to consumers and businesses.

The revenue from the fuel tax is primarily used for transportation funding, including road construction and maintenance. During the suspension period, the state has to rely on the current budget surplus or other revenue sources to make up the difference, or delay some spending.

Georgia is sitting on roughly $14.6 billion in surplus reserves, according to the Georgia Budget and Policy Institute, giving lawmakers significant flexibility to fund tax cuts, rebates and temporary measures like the gas tax suspension.

The policy is designed to provide short-term relief when fuel prices rise, lowering the cost of gasoline by roughly 30 cents per gallon. That can increase disposable income for households and reduce operating costs for businesses that rely heavily on transportation.

However, because the suspension is temporary, it does not create a long-term change in state revenue or tax policy. Instead, it represents a short-term tradeoff: less funding flowing into transportation accounts in exchange for immediate savings at the pump.

The research and outline of this article was aided by the use of ChatGPT