The state will refund next month $34 million in taxes collected from used-vehicle sales between individuals, Gov. Zell Miller said last week.
Miller's decision came two weeks after Cobb County Superior Judge Mary E. Staley declared that the 16-month-old levy was illegal because it was imposed without approval by the state legislature.
"Today the state is in solid financial shape and the rainy-day fund has more than $121 million," Miller said in a statement. "Under these circumstances I am ordering the revenue commissioner to issue refunds to all who paid the casual sales tax."
Miller acted despite an recommendation against the refunds from Attorney General Michael Bowers. Bowers argued that returning the collected taxes would leave the state vulnerable to other lawsuits seeking repayment of taxes already collected.
Miller suspended the vehicle sales tax in October after a class-action lawsuit was filed by Daniel W. Tedder, a Georgia Technical University engineering professor.