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Rep. Chris England, D-Tuscaloosa, is bringing back a bill this session that aims to give counties and municipalities the option to reduce local sales and use taxes on food.
The bill stalled in committee last session after the Association of County Commissions of Alabama raised concerns.
“It’s one of the ways that we can get to reducing some of the burden in the grocery store for the basic necessities for Alabama citizens,” England said. “I want to make sure it’s clear that cities have that ability.”
England brought the bill after the Tuscaloosa City Council considered reaching its sales tax on groceries. According to England, while researching its options the council found state law would prevent them from doing so.
“There is a blanket definition for what rate has to apply to certain items,” England told the committee. “If that rate is different in your area, the state will. Not collect your taxes.”
Lawmakers in the Legislature have grappled for years with the possibility of reducing or eliminating the statewide tax on groceries and are one of few states that have not done so.
ACCA director Sonny Brasfield said the problem for the state has been how to replace the lost revenue, and said that carries over at the local level.
“It’s a non-starter for us for the same reasons as the state,” Brasfield told APR. “The reason there’s no legitimate debate about this issue is the Legislature continues to wrestle with how does it replace revenue? Without giving counties the authority to replace the revenue, this is in the same bushel basket with the state debate.”
The bill would allow for cities and municipalities to lower or eliminate sales or use tax on food following a public hearing. The bill would also give the local governments authority to raise taxes on food in the same manner following any reduction taking place. It does not mandate any local governments to make tax changes.
The breakdown of sales taxes varies by county and municipality.
“I think the issues are complicated. For counties, most sales tax revenue is allocated to specific functions, education is part of it. It’s not uncommon for sales taxes at the county level to be pledged for bond issues, to be allocated for other levels of government,” Brasfield said. “This issue is further complicated by who receives the sales tax.This bill would not require entities receiving sales tax to consent to this removal. But more specifically for us, we would not be in favor of a bill proposed by the Alabama legislature allowing local governments to do something that the state of Alabama has been unwilling to do.”
