Mobile Alabama's Movement to Reduce Sales Tax
- Sales Tax News
- Oct 20, 2014 | Gail Cole
The rate of sales tax in Mobile, Alabama, is a hefty 10%. It was set to decrease to 9% on August 1, 2015 but has recently been extended for an additional three years.
The Mobile City Council has a history of supporting sales tax increases:
- In 2010, the council approved a 16-month temporary sales tax increase, raising the city rate from 4% to 5% and the combined state and local rate to 10%.
- In 2012, the council approved an extension of the increase and established a “hard sunset date” of July 31, 2015.
- Last month, the council approved a three-year extension of the tax that was to sunset on July 2015. It is now set to expire on September 30, 2018.
Supporters of the tax speak of how essential that tax revenue is. Councilman Joel Daves has concluded that “the money raised $32 million a year and is absolutely critical for the city not only achieving the great opportunities in front of us, but simply surviving.”
The lengthy extension comes as a bit of a surprise. Mayor Sandy Stimpson had been pushing for a two-month extension, whereby the increase would have expired on September 30, 2015. The mayor was in Washington, D.C. when the City Council extended the tax for three years.
Lower sales tax
Instead of extending the higher rate of sales tax, chief economist of the Gulf Coast Center for Impact Studies Semoon Chang thinks city and county officials need to work to reduce it. He argues for an elimination of sales tax exemptions and a reduction of the general sales tax rate. At that point, he says, “local and state governments can then focus on raising the property tax.”
Change is not only needed in Mobile, according to Dr. Chang. He notes that “cities in Alabama assess a dizzying array of different tax rates, depending on locations” and that “the variety of sales tax rates … potentially leads to ‘non-compliance’ in payments, especially among smaller business owners.”
Dr. Chang may raise some interesting points, but there is resistance to his ideas. Councilman Daves points out that it isn’t easy to increase property taxes. “It’s a very complicated process. You have to go to the legislature and authorize for a referendum.”
Simply put, it is easier to change sales tax rates.
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