Audit: No economic activity can be tied to Georgia’s jet fuel tax exemption

No economic activity, such as jobs, labor income, or value-added output, can be tied to Georgia’s jet fuel tax exemption, but it potentially results in lower airfares for travelers flying from Atlanta.

Georgia State University’s Fiscal Research Center (FRC) estimated that the same amount of economic activity, such as jet fuel purchases and resulting flights, would have occurred without the exemption, at least during the short term covered in this review.

FRC estimated that companies receiving the sales tax exemption saved $64.8 million in fiscal 2024. Using IMPLAN, a regional input-output model that analyzes economic activity, FRC estimated that $64.8 million within the associated industry would result in 357 jobs and $60.3 million in value added to the state economy.

“Due to the lack of any short-term economic activity attributable to the exemption, there is no economic or fiscal return on investment, and the cost per job cannot be calculated,” the Georgia Department of Audits & Accounts concluded.

FRC found that the jet fuel exemption provides several ancillary benefits, including a competitive business environment influencing many business location decisions. In the long run, the share of routes and freight flowing through the state could be negatively impacted if fuel costs exceed that in other states, FRC concluded.

The exemption also lowers airfares out of Hartsfield-Jackson Atlanta International Airport.

Georgia exempts jet fuel purchases from state sales and use taxes and is intended to increase competitiveness with other states with major airport hubs. Texas and New York, home to two major airport hubs, have exemptions for commercial airlines from taxation on jet fuel, while Colorado, California, and Illinois charge either sales or excise taxes.

The exemption began as a temporary suspension by executive order in July 2018. State lawmakers suspended the tax indefinitely during a November 2018 special session.