Alabama grocery tax repeal likely dead again

MONTGOMERY, Ala. (AP) -- The effort to remove the Alabama sales tax from groceries is likely dead for another year.

A Republican legislator tried one approach and a Democratic legislator tried another, but neither got very far in the 2013 session.

Republican Sen. Gerald Dial of Lineville persuaded a Senate committee to approve his bill to phase out the 4 percent state tax, but he said it is unlikely he can pass it with only five meeting days remaining in the legislative session.

A bill by Democratic Rep. John Knight of Montgomery never even got considered by a House committee.

"We don't see action coming in the few remaining days," said Jim Carnes, communication director of Alabama Arise, an organization representing Alabama's poor.

Legislators have been trying to figure out a way to remove the sales tax on groceries for more than a decade, but no one has succeeded because the Legislature has never agreed on how to replace the lost revenue. Replacing the revenue is a priority because sales taxes are a major source of funding for public schools.

Dial's bill would reduce the state sales tax on groceries by 1 cent on the dollar each year for four years. To make up the lost revenue, he would increase the state sales tax on other purchases by one-quarter cent per dollar for each year for four years. By the end of four years, consumers would pay no state tax on groceries and 5 percent on other purchases. State and local sales taxes would remain on groceries.

Dial said he doesn't consider his bill a tax increase because people have to buy groceries, but they can cut back on other purchases, such as clothes.

Dial's bill was placed on the Senate's work agenda Thursday, but the Senate's top Republican, President Pro Tem Del Marsh of Anniston, got the Senate to delay action. "There is still work to be done," Marsh said.

Dial's bill drew opposition from Alabama Arise.

"It's amazing to me that people who are supposed to be helping the poor are working against my bill," Dial said.

Carnes said Dial's bill maintained the regressive nature of the sales tax, and many non-food items are essential purchases for people.

Alabama Arise favored Knight's bill. It would keep the state sales tax on non-food purchases at 4 percent. It would replace the revenue from groceries by repealing the state income tax deduction that Alabama gives for federal taxes paid. That would not affect many low-income Alabamians, but would require higher earners to pay more state taxes.

Knight tried repeatedly to pass his bill when Democrats controlled the Legislature, but never succeeded. He reintroduced his bill this session, but he couldn't get it considered by a Republican-dominated committee.

Dial said it will never pass now that Republicans are in control. "No Republican Legislature is going to pass that because that is a direct tax on the people," he said.

Carnes said Alabama Arise was disappointed that Knight's bill didn't move again. "But we are happy that what we consider a bad solution didn't move also."

Dial said he will be back with his bill in the 2014 session, when legislators will be standing for election.

"It is great politics for an election. When people ask what you have done for them, you can say, 'I took the tax off food for you,'" Dial said.

Source: http://news.yahoo.com/alabama-grocery-tax-repeal-likely-195227562.html

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