Lori Glenn
May 13, 2008 10:45 pm
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MOULTRIE — Effective Monday, Gov. Sonny Perdue suspended the state gas tax on diesel sold for off-road uses to help farmers and timber producers hurting from sky-high fuel prices.
“Our farmers have borne the brunt of this multi-year drought, and now face record fuel prices during our planting season,” Perdue said. “Suspending this tax will bring needed relief to our state’s largest industry.”
Suspension of the tax will save farmers and timber owners the 4 percent sales tax charged on off-road diesel dyed red to distinguish it from on-road diesel. The state does not charge an excise tax on this type of fuel, and the executive order does not impact local taxes that are levied. The suspension is expected to offset state revenues by $2 million to $4 million.
Pursuant to state law, the tax will be suspended until the General Assembly meets again. The legislature has adjourned its regular 2008 session, which means the next meeting of the General Assembly is expected to be in January 2009.
“This is an important step in providing relief to many Georgians who have been hit hard by the rising prices of gas,” said Sen. Saxby Chambliss, R-Ga. “I know many farmers who are grateful for the tax suspension and I applaud Governor Perdue for his leadership. I will continue to work with my colleagues in Congress to provide additional relief for Georgians.”
Chambliss, of Moultrie, is a co-sponsor of several legislative items aimed at reducing gas prices, including legislation proposed by Sen. John McCain, R-Arizona, that would temporarily suspend the federal gas tax during the summer months. Chambliss, along with fellow Georgia Sen. Johnny Isakson, are also co-sponsors of the “Domestic Energy Production Act of 2008,” legislation to increase domestic energy supply, a Monday press release said, and, along with 15 other Republican senators, urged President Bush to halt deposits of domestic crude oil into the U.S. Strategic Petroleum Reserve. Chambliss and Isakson voiced disappointment that Bush so far is rejecting the idea.
At home, the tax suspension is nice, but it isn’t near enough to beat down costs.
“Four percent is going to be a savings, obviously, but all-in-all, it’s the tip of the iceberg. ... Diesel is killing us, but all of the output costs that have been driven up because of fuel prices are killing us worse than the fuel prices I would say,” said Jon Schwalls, director of operations of Southern Valley Produce in Ellenton.
Fertilizers have doubled and tripled over the last 12 months. Part of that is generated from increases in freight, he said. Freight also has doubled, which results in higher prices for consumers. When prices go up on fresh fruits and vegetables, consumers often pass them over for cheaper options, Schwalls said, driving down demand.
“This stuff is moving 8 to 12 cents,” he said, referring to price leaps over the past week. “... The biggest problem is that there’s no relief in sight, and that makes a lot of people pack it up and say, ‘It’s time to get out.’
“We are at the absolute bottom of the totem pole — us, fishermen and truckers,” Schwalls said. “... There’s been nothing in produce that reflected the increase in costs of production. If you look at the cost of goods sold versus the FOB pricing (free on board pricing in which the buyer is responsible for the shipping costs), there’s a huge variance.”
The produce industry in Georgia, especially mixed vegetables, have been in a slump since spring 2004, he said, and inputs have skyrocketed over the past 12 months, “horrendously in the past six,” he said, and FOB pricing is still weak.
“Fresh fruits and vegetables are luxury items. Any time things get soft in the economy, they leave it out,” he said of consumers.
Labor cuts are another side effect of soaring input costs. Some local producers have cut incoming labor upward of 60 percent, Schwalls said. In these hard times, less crops are being produced resulting in less labor needed in the field.
“Already for the spring I’ve seen production acres grown being cut back,” he said.
Southern Valley also has a growing operation in Mexico, and Schwalls said the business has taken the hit just as hard there as in the U.S. Nearly all materials used in production have to be shipped from the U.S. to the Yucatan Peninsula.
Perdue also signed legislation to support Georgia agriculture. S.B. 515 sponsored by Sen. John Bulloch, R-Ochlocknee, changes the membership of the Seed Commission and dissolves the commission’s statutorily created advisory board and H.B. 649 sponsored by Rep. Tommy Smith, R-Nicholls, establishes an Agricultural Commodity Commission for blueberries. H.B. 1178 sponsored by Rep. Ellis Black, D-Valdosta, extends state sales and use tax exemption sunset on liquefied petroleum gas or other fuel used in a structure in which swine are raised to June 30, 2010. H.B. 1088 allows the Department of Transportation to place directional signs on the state highway system that directs passing traffic to an agricultural tourist attraction; this legislation is sponsored by Rep. Butch Parrish, D-Swainsboro.
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