Freeport Inventory Tax Exemption – Fact Sheet

Definition of Classifications of Inventory Eligible for the Freeport Inventory Tax Exemption 

  • Class 1: Inventory of goods in the process of being manufactured or produced, including raw materials and partly finished goods; 
  • Class 2: Finished goods produced in Georgia and held by the original manufacturer within the last 12 months; 
  • Class 3: Finished goods stored in Georgia within the last 12 months and destined for shipment out of state; and 
  • Class 4: Stock-in-trade stored in e-commerce fulfillment centers.

Context 

  • Freeport is used as a site selection screening factor, used to narrow the field of alternative communities considered for business locations – typically applied early in the site selection process, before communities are even aware they are being considered. 
  • Georgia is one of only nine states that tax business inventory. In an effort to make the State a more appealing business location for manufacturing, distribution, warehouse, and e-commerce fulfillment center operations, State enabling legislation (OCGA 48-5-48.2) governing Freeport classes 1-3 was originally enacted in 1979, with the 4th class added more recently. 
  • 93% of Georgia’s counties and over 140 cities have adopted Freeport classes 1-3, with many now considering adding the 4th class. Gwinnett County offers a 100% Freeport exemption in classes 1-3, as do six Gwinnett cities (including Berkley Lake, Buford, Duluth, Grayson, Sugar Hill, and Suwanee). 
  • The Norcross City Council has approved a resolution to include the questions on the ballot of whether the City shall exempt from taxation the specified types of inventory in classes 1-4. If approved by the voters, Norcross would join Gwinnett County and the six noted cities in Gwinnett (as well as Doraville and other surrounding cities) in providing Freeport in classes 1-3 and be the first in Gwinnett to offer this exemption in class 4 – which could provide an additional competitive advantage. 
  • The I-85/Jimmy Carter Blvd./Peachtree Industrial Blvd. area has been identified as one of seven major logistics hubs in the metro Atlanta area. Approximately 25% of Gwinnett’s industrial buildings and manufacturing-related jobs – as well as just under 20% of the County’s wholesale-related jobs – are located within the Gwinnett Village CID, which includes a portion of the City of Norcross. 
  • Demand for e-commerce fulfillment centers is growing with new real-time, next-day, and same-day delivery options that are being offered to consumers. 
  • Gwinnett Village CID Executive Director, Marsha Anderson Bomar, has indicated that she supports Freeport, noting that “This sector of our economy provides well-paying jobs and rents/property values are strong. They are a good quiet, clean neighbor and a highly desirable part of our economic development picture in the Village.” 

Current Trends 

  • The number of Freeport-eligible commercial businesses are down nearly 15%, since 2015. 
  • The number of Freeport-eligible industrial businesses are down over 35%, since 2014. 
  • The net taxes from Freeport-eligible industrial businesses are down nearly 25%, since 2014. 

Potential Impact 

  • In 2016, Freeport would have resulted in a reduction in tax revenue of $225,000. 
  • The reduction in tax revenue could be expected to be recouped through new business locations, existing business expansions and additional capital investment, as well as by becoming more appealing to businesses for annexations. 
  • Freeport-eligible businesses typically provide jobs with higher than average wages and, in Norcross, they pay about twice the amount of property taxes than other commercial businesses. 
  • Freeport affects only 8% of all businesses within the City, but these businesses account for over 60% of the net overall business tax revenue of $898,500 – making it critical to retain this business segment. 
  • Enacting Freeport could position the City of Norcross to enhance its competitiveness and benefit more fully from economic development efforts focused on business recruitment, retention, and expansion, as well as special initiatives, proposed by the Gwinnett Village Community Improvement District and others, to grow the area’s economy. 

Click Here for the Sample Ballot

The Southwest Gwinnett Chamber board of Directors has voted to support the repeal of the Freeport Taxes resulting in a more business friendly environment that will draw new businesses and jobs to the city. 

We recommend a YES vote on all four ammendments

(1) INVENTORY OF GOODS OR RAW MATERIALS IN THE PROCESS OF MANUFACTURE OR PRODUCTION; YES

(2) INVENTORY OF FINISHED GOODS, MANUFACTURED OR PRODUCED IN THE STATE OF GEORGIA; YES

(3) INVENTORY OF FINISHED GOODS IN TRANSIT TO A FINAL DESTINATION OUTSIDE THE STATE OF GEORGIA; YES

(4) STOCK IN TRADE OF A FULFILLMENT CENTER WHICH IS STORED IN A FULFILLMENT CENTER AND WHICH IS MADE AVAILABLE TO REMOTE PURCHASERS WHO MAY MAKE SUCH PURCHASES BY ELECTRONIC, INTERNET, TELEPHONIC, OR OTHER REMOTE MEANS, AND WHERE SUCH STOCK IN TRADE OF A FULFILLMENT CENTER WILL BE SHIPPED FROM THE FULFILLMENT CENTER AND DELIVERED TO THE PURCHASER AT A LOCATION OTHER THAN THE LOCATION OF THE FULFILLMENT CENTER. YES