Last week, the Atlanta City Council passed an ordinance to increase the freeport exemption for manufacturers and distributors to 100 percent.
The inventory tax exemption increase will remove the tax for certain classes of goods destined for shipment outside of the state, equaling exemptions in surrounding counties and cities.
The move will help the City retain manufacturing jobs while building the tax base and attracting new investment.
According to Invest Atlanta,
the official economic development authority for the City, manufacturing firms generate nearly
$6 billion in sales each year, accounting for more than 10 percent of
all sales in the City of Atlanta.
They employ more than 35,000 people, representing more than 6 percent of the City’s workforce. The average wage for these middle class jobs is more than $76,000 per year.
New business, stronger investment and job growth spurred by the amended freeport exemption will improve the City’s competitive position by attracting and retaining manufacturing firms.
"Manufacturing is an important economic driver for the City, with great growth potential if the right incentives exist," said Mayor Kasim Reed in a news release. “By eliminating the inventory tax for manufacturers, we will be able to better grow our industrial sector, and attract new investment in the City, which will create new jobs and help us continue to strengthen our economy.”
Georgia is one of only 14 states with an inventory tax. Previously, the City offered a 20 percent inventory tax exemption on raw material, work-in-process and finished goods inventory. The annual revenue from those taxes was approximately $2 million.
Since 2000, Atlanta has lost nearly 4,700 manufacturing industry jobs according to a study by the Georgia Institute of Technology.
“In the last five years, dozens of
manufacturing and logistics companies made the decision to locate just
outside of the City’s borders because surrounding cities had a more
favorable tax climate
related to inventory,” said Invest Atlanta President and CEO Brian P. McGowan in the release.
“Increasing the freeport exemption is critical to our economic competitiveness, especially at a time when the United States is seeing an increase in manufacturing and Atlanta is perfectly positioned to be a major east coast logistics center. This will create more jobs for our residents and more tax revenue for the City of Atlanta.”
The ordinance will go into effect Jan. 1, 2015.
- This report was prepared by Invest Atlanta and edited for publication.