Can grocery tax ban get a second chance?
Alabama House Democrats will introduce a ban on the grocery tax once again.
A ban on Alabama’s four percent grocery tax passed the House of Representative but failed in the Senate in 2008.
Now, Democrats plan to bring up the proposal in the next legislative session, which begins in February.
Sen. Wendell Mitchell (D-Luverne) said he is in favor of banning the grocery sales tax – it’s making up the difference that poses a problem.
The grocery sales tax generates around $320 million for the state, but the bill plans to compensate by removing some of the state income tax deduction that Alabama taxpayers get for their federal income taxes.
The total tax deduction is worth $550 million a year.
However, Mitchell voted against this plan last year.
“I voted against that part of it,” Mitchell said. “They were trying to remove the exemption on federal income tax on the state return, and that’s a hidden tax on people. The break we all get on our state returns by subtracting the federal income tax we pay is significant.”
But, Mitchell said he is willing to explore options to find a way to allow the bill to pass.
“I think it’s a fair thing to do,” Mitchell said. “Several states across the country have never had a sales tax on food just because it’s a necessity for people.”
Rep. Charles Newton (D-Greenville) supported the first bill, but he said passage of new legislation would be especially difficult considering the economic circumstances.
“It’s going to be tough,” he said. “There’s many ways to do it. Some states reduce the tax, while others eliminate it completely. It’s just too early to say how this is going to go.”
Gov. Bob Riley said in a news conference last week he has another plan for making up the more than $300 million that would be lost by banning grocery tax.
Mitchell said timing, if anything, would be what likely hinders the bill from passing in a time where Alabama’s budget is facing severe shortages.
“If we pass a sales tax exemption bill we’re going to need to replace that money because we are in a deficit,” Mitchell said. “The timing for something like this is not good, and if it fails that will be the reason.”
Advocate Managing Editor Kevin Pearcey contributed to this story.