Alabama Says Sales Tax Eats
- Sales Tax News
- Mar 19, 2012 | Susan McLain
Alabama has a sales tax on groceries and over-the-counter drugs. And in a report “…by the nonprofit, nonpartisan Institute on Taxation and Economic Policy…[m]iddle-income families, those making between $26,000 and $46,000, paid 9.5 percent of their incomes in state and local taxes.” Compare this to the 4.9 percent burden borne by those making $153,000 to $384,000; and that drops to 4 percent for those earning $384,000 and up. Kimble Forrister, state coordinator for Alabama Arise says, “That’s an upside-down tax system.”
HB 45, sponsored by Representative John Knight, D-Montgomery, erases the “…4 percent state sales tax on groceries and over-the-counter drugs, which would save taxpayers an estimated $326 million a year. But the plan also would erase part of the state constitution that lets individuals deduct from their taxable state income the federal income taxes they paid, which would boost the state income-tax collections by an estimated $485 million a year.” The extra income will be directed to the Education Trust Fund.
Tom Scarritt, editor of The News, in Birmingham, says that Alabama has a “…historic antipathy toward taxes.” He points out that a sticking point in HB 45 is that it replaces the lost incomes by “…moving a significant tax burden off the poorest Alabamians and onto those who make the most money” (http://arisecitizens.org/ “Alabama’s tax system is unfair and immoral”).
A report in the Anniston Star notes that only “…30 people attended a rally last week at the State Capitol to call for an end to the grocery tax.” The report states that they “…fully expect that bill to meet stiff challenges.”
Alabama Arise supports this legislation but notes that compromise may be the only way to achieve the goal. Senator Gerald Dial, R-Lineville has submitted SB 387, which would increase the state sales and use tax, however it would eliminate the tax on food. This would be accomplished by “…phas[ing] out the grocery tax by 2015 and replac[ing] the revenue by raising the overall state sales tax from 4 to 5 percent.”