Extras on Excise: The Fourth of July Should Bring Pop and Profit to Georgia as the State Legalizes and Taxes Sales of Fireworks

Sparklers, Rockets and Taxes! Oh My! Georgia will have an abundance of them all now that fireworks are finally legal in the state. Gov. Nathan Deal (R) signed H.B. 110 into law, legalizing the sale of consumer fireworks while also imposing an excise tax and licensing requirements on those who sell them.

“While consumer fireworks have been illegal in Georgia for a long time, it did not mean they were hard to purchase. Nearly every state that borders Georgia sold fireworks legally…and many Georgians would simply take a drive to get these products and celebrate in defiance of the law,” said Georgia Rep. Scot Turner (R), a sponsor of the enacted legislation. Indeed, Georgia is bordered by Alabama, Florida, North Carolina, South Carolina and Tennessee, and only in North Carolina is the sale of fireworks prohibited.

Beginning July 1, just in time for the Fourth of July holiday, Georgians can purchase fireworks without crossing state lines, and as a bonus the state can enjoy the additional revenue that legalization is expected to generate. Data from the American Pyrotechnics Association shows consistent annual growth in U.S. consumer previous hitfireworks revenue since 1998. Revenue reached $695 million in 2014.

Businesses will be able to sell fireworks from permanent retail facilities upon obtaining a distributor’s license from the Georgia Safety Fire Commissioner. The initial license fee for such businesses is $5,000 per location, and the annual renewal fee is $1,000 per location. 

Georgia will also impose an excise tax on the sale of fireworks at a rate of 5 percent per item sold. The tax will be levied in addition to sales tax and any other taxes imposed under Georgia law. The seller must remit this tax to the state; however, like sales tax, it will be paid by the purchaser at the point of sale. 

The former fireworks prohibition was essentially unenforceable and did not benefit the state, according to Turner. With the new licensing and tax regime, “we have a mechanism to keep our sales tax dollars at home and create an industry that will put Georgians to work,” he said. 

The new law also permits the sale of fireworks from temporary retail stands in the state and requires sellers to hold a distributor’s license to do so. The fee for this license is $500 per location and the license expires 90 days after issuance. Local governments will issue these licenses but are not permitted to do so until January 1, 2016. 

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Is legalizing consumer fireworks the right move for Georgia?

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