Delta Tax Break Officially Removed from Georgia Tax Bill (1)

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By Chris Marr

A jet fuel tax break for Delta and other airlines flying out of Atlanta was officially stripped from a tax-cut bill that’s headed for a vote on the Georgia Senate floor.

Although Gov. Nathan Deal (R) supported the sales tax exemption on jet fuel, the governor still plans to sign the tax bill, H.B. 918, he told reporters late Feb. 28. The bill provides a $5 billion tax cut over five years—more than offsetting expected revenue gains resulting from the federal tax law enacted in December ( Pub. L. No. 115-97). It would cut individual and corporate income tax rates, double the standard deduction, and update the state tax code to largely conform with the Internal Revenue Code.

The governor also criticized the tone of public debate after GOP legislative leaders threatened to kill the tax break because Delta Air Lines ended a discount program for National Rifle Association members.

“We were not elected to give the late-night talk show hosts fodder for their monologues,” he said.

The Senate’s Rules committee approved the revised version of H.B. 918, which stripped out the jet fuel tax break, during a Feb. 28 meeting but hadn’t scheduled the floor vote yet as of press time. The vote could come as soon as March 1, as Deal has urged quick passage of the tax bill.

Attack on Conservative Values

Lt. Gov. Casey Cagle (R) and other legislative leaders had halted the bill over Delta’s move to cut ties with the NRA. Cagle, who is also running for governor in 2018, called it an attack on conservative values. A number of major corporations ended their NRA affiliations in the midst of growing calls for gun control legislation after the Feb. 14 school shooting in Parkland, Fla. Delta has its headquarters and main hub in Atlanta, and the airline is the city’s largest employer.

The controversy drew enough national attention that officials from other cities and states, including Birmingham, Ala., and New York, invited Delta via Twitter remarks to consider relocating its headquarters.

The governor dismissed the talk of Delta relocating, as well as a question of whether this controversy hurts Georgia’s chances of attracting Amazon’s HQ2 project.

“I don’t think it helps us,” he said, but added he would tell Amazon and other prospective companies to “look at our record” as a top-ranked state for business climate.

Governor Still Eyes Jet Fuel Break

Deal said he still plans to press for a separate means of exempting jet fuel from sales tax — apart from H.B. 918 — arguing the Atlanta airport faces a competitive disadvantage to other major airports where the fuel taxes are lower, in some cases zero.

The bill includes the annual state tax code updates for 2017 and 2018, largely conforming the state to the new federal tax law enacted in December. It would decouple the state from certain corporate tax provisions of the new federal law, including the full expensing and bonus depreciation for business capital investments, as well as the interest deduction limitations.

The also would cut individual and corporate income tax rates to 5.75 percent from 6 percent in 2019, with another possible drop to 5.5 percent in 2020 if approved by a separate legislative resolution.

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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