Alabama’s grocery sale tax may be cut in half under bill approved by the state House
- The Alabama House of Representatives has approved a bill that would cut sale tax on groceries from 4% to 2%.
- The measure received broad bipartisan support in Alabama this year in the face of soaring food prices and a rare budget surplus.
- Previous attempts to pass similar measures were struck down in Alabama as the 4% tax provided more than $600 million of education funding.
Alabama lawmakers on Thursday advanced legislation to remove half of the state’s 4% sale tax on groceries, a proposal that garnered broad bipartisan support in the face of soaring food prices.
The House of Representatives voted 103-0 for the legislation that would gradually remove the tax by one percentage point a year, provided there is enough growth in tax collections to offset the revenue loss, until the tax drops to 2%. The bill now moves to the Alabama Senate, where all senators have signed on in support of similar legislation.
Alabama is one of only three states that tax groceries at the same rate as other purchases. Some lawmakers, mostly Democrats, had for decades unsuccessfully pushed for the removal. But the measure gained bipartisan traction this year in the face of rare budget surplus and consumer frustration over rising food prices. Proponents said reducing the tax would help every Alabamian every time they walk in the grocery store.
BIPARTISAN ALABAMA MEASURE CUTTING HALF OF STATE’S 4% SALE TAX ON FOOD ADVANCES IN STATE LEGISLATURE
Rep. Napoleon Bracy, D-Prichard, said the vote had been a “long-time coming.”tax”This is something that can give every household in the state of Alabama an immediate raise in their income. Everybody can feel a boost in their own personal economy,” Bracy said.
The 4% tax provides more than $600 million annually to the state for education funding, according to estimates from the Legislative Services Agency. Efforts to remove the tax in the past largely faltered because of concerns about the loss to education funding. The House-passed proposal would not replace the revenue.
While the measure won widespread support, some groups, including the organization that lobbies for teachers and public school employees, expressed concern about a loss of revenue for the state education budget.
Allison King of the Alabama Education Association cautioned a legislative committee on Wednesday that the state’s budget surplus is temporary and this would be a permanent tax cut.
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“AEA is not against cutting grocery taxes, but we are against cutting grocery taxes without an equally reliable funding source to replenish the lost revenue,” King said.
While Alabama is one of the few states to fully tax groceries, most other states have higher property taxes or other revenue sources to fund education, King said.
Rep. Danny Garrett, the bill’s sponsor, said GOP lawmakers opted to take many other proposed tax cuts off the table in favor of the grocery-tax removal.
“This is a tax cut that we are confident that we can sustain without it impacting the education trust fund,” Garrett said. If people use the money they save “to buy something else,” that will generate sales taxes for education, he said.