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Georgia gas tax-cut | Will gas stations pass along the savings to customers?

Georgia’s governor and attorney general are expected to discuss Friday how the state will try to ensure customers get the full tax cut.

ATLANTA — A price-cut at the gas pumps is on the way in Georgia.

Friday, Georgia Governor Brian Kemp is scheduled to sign into law the elimination of the state’s $0.29/gallon gasoline tax for at least two months.

But will gas stations actually pass along all of those savings to customers?

There is nothing in the legislation that requires gas stations to pass along the gas-tax savings.

Thursday night, the Georgia attorney general’s office told 11Alive that if they don’t pass along the savings, they could potentially be investigated for price gouging.

Domanie Barber of Decatur thinks Georgia suspending the state’s $.29/gallon gas tax for two months is a good call.

“That’s an amazing idea,” Barber said as he was gassing up Thursday evening. 

If gas stations decide to not pass along the tax cut to the customers, Barber wants the government to intervene.

“If they don’t,” Barber said, “the government should come back and get it. Come to them for the tax. And maybe give them a healthy fine.”

In fact, in 2005, after Hurricane Katrina shut down refineries in the Gulf, Georgia suspended the gasoline tax, and in Atlanta two Georgia State University economics professors, David Sjoquist and James Alm, discovered that gas stations across the state did not pass along all of the tax savings.

The law then didn’t require them to do so.

“What we found was that about two-thirds of the tax found its way into reduced prices,” Dr. Sjoquist said Thursday. “And about a third of it stayed with the retailer.”

He said studies in other states that suspended their gas taxes found their gas stations were also keeping about one-third of the savings.

If that were to happen this time, he said, “I would say the price of gasoline (in Georgia) will go down about $0.20, holding everything else constant. So I suspect that the gasoline retailers will hang on to some of that tax reduction.”

As it is, Sjoquist and other economists like Professor Ray Hill of Emory University point out that as crude oil prices continue to fluctuate, and as retail gas prices begin to decline due to many market forces, it will be tough to know how much of the lower prices at the pump are the result of Georgia’s gas tax suspension.

“We’re probably going to see a decline in gasoline prices anyway,” Dr. Hill said Thursday, “because we’ve seen a pretty dramatic drop in the price of oil in the last week or so. And so it’s going to be hard to distinguish exactly the effects of the elimination of the gas tax from everything else that’s going on in the market. It’s absolutely going to help. But we’ve got no way of actually seeing whether the full $0.29 gets passed through to consumers.”

Domanie Barber, who Thursday evening bought a half-tank for what he paid to fill his tank a month ago, has no doubt gas stations will try to keep some of the savings for themselves.

“I think they will,” he said, with a laugh.

The governor and the state attorney general are expected to have more to say on Friday about making sure that gas stations pass along the full $0.29/gallon gas-tax break to the customers.

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