Georgia farmers will get some slight relief from soaring fuel costs thanks to an order signed recently by the governor that temporarily suspends the state’s 4 percent sales tax on dyed diesel fuels.
Georgia Gov. Sonny Perdue signed an executive order on temporarily suspending the application of the 4-percent state sales and use tax to sales of dyed diesel fuels, effective the date of signing. Qualifying fuels are dyed diesel fuels used in agriculture, timber growing and harvesting, mining and construction.
Dyed fuels are not permitted for highway use.
The temporary suspension will remain in place until such time as the state’s General Assembly acts on the executive order, or until the order is rescinded by the governor. The order suspends the 4-percent state sales and use tax only. Local sales and use taxes and local option sales taxes are not affected.
The suspension of collection of the 4-percent state sales tax represents approximately 15 cents per gallon savings in the cost of dyed diesel fuels to qualified users at current prices.
The savings experienced by dyed fuel purchasers will fluctuate as the price of fuel changes. Currently, the cost of purchasing 1,000 gallons of dyed fuel is approximately $150 less than it would be if the 4 percent tax were applicable, according to Keith Kightlinger, University of Georgia Extension economist.
For agricultural producers, the tax suspension applies to dyed fuels used in tractors, harvesting and spraying equipment and other motorized, mobile equipment qualifying for the use of dyed fuel. The price of diesel fuel used in the course of irrigating crops is unchanged by the executive order, since fuels exclusively used for irrigation are exempt from state sales tax under Georgia law.
Diesel fuel users are reminded that dyed fuels are for off-road applications only, and are not permitted for use in vehicles licensed for highway use. Georgia Code Sec. 48-9-17 provides for punishments including fines of $1,000 to $10,000 for the highway use of dyed fuels, the imprisonment of violators for 30 days to 12 months, or both.
Federal law requires that an excise tax be paid on fuels used for on-highway purposes.
Dyed fuels are exempt from federal excise tax. The federal penalty for the improper use of dyed diesel fuel is the greater of $1,000, or $10 per gallon of improperly used fuel on which no tax has been paid.
In addition to the legal penalties for the improper use of dyed fuel, the use of low sulfur (dyed) diesel in vehicles designed for the use of ultra-low sulfur diesel can result in higher maintenance costs, engine damage and invalidation of the manufacturer’s warranty.