Georgia Governor Nathan Deal signed HB 48-Freeport Expansion and Elimination of Local Inventory Tax on April 17, 2012. This measure creates a Level 2 Freeport Exemption that applies to all business inventories that did not qualify for the Level 1 Exemption. However, local governments must first call for a referendum to approve of the Level 2 Exemption and to determine the exemption rates. Counties can implement the Level Two Freeport Exemption at the following rates:
- 20%,
- 40%,
- 60%,
- 80%,
- 100%
This bill is great news for Georgia retail businesses that maintain inventory in the state. Neighboring states such as Alabama, Florida, North Carolina, South Carolina and Tennessee have no personal property tax on business inventories. Many proponents of the bill believe that this type of economic legislation can help Georgia businesses dig out of the current economic recession. Advocates purport that the elimination of this tax will entice new businesses to reside in Georgia and will encourage existing business to reinvest in plant, equipment, and human resources.
For better or worse, inventory tax in Georgia may be a thing of the past. Many local governments knew this day was quickly approaching when the Georgia Business Inventory Exemption, Referendum A on the November 2, 2010 ballot was approved. That referendum exempted the state’s portion of business inventory tax. Local governments depend heavily on property tax revenue for their operating budget. Any revenue lost to this exemption will most likely be made up in higher millage rates, user fees, or decreased services on the local level. Call me crazy but I like living in good school districts, having clean parks, and having the medians mowed...
“The referendum ballot shall specify retail business inventory as the types of property as defined in this Code section which are being proposed to be exempted from taxation. The election superintendent shall issue the call and shall conduct the election on a date and in the manner authorized under Code Section 21-2-540.”
