Bills would fully repeal Alabama grocery tax
Proposal would replace lost revenues by repealing federal income tax deduction on state taxes
Sen. Merika Coleman, D-Pleasant Grove, stands on the floor of the Alabama Senate on March 7, 2023. Legislators gathered Tuesday for the first day of the Alabama Legislature’s 2023 regular session. (Brian Lyman/Alabama Reflector)
Two Democratic legislators said Tuesday they will introduce their own legislation to repeal the state sales tax on groceries.
Sen. Merika Coleman, D-Pleasant Grove, said at a press conference Wednesday that she intends to file a complete repeal of the 4% levy.
Rep. Penni McClammy, D-Montgomery and Sen. Andrew Jones, R-Centre, are working on another grocery tax repeal bill.
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The proposal is the latest to take down the tax, a longtime goal of anti-poverty advocates that was stymied by the tax’s tie to the Education Trust Fund budget. With record-breaking revenues expected in next year’s budget, the idea has gained momentum in the current session.
Coleman proposal would fully repeal the 4% sales tax. It would replace the education budget revenue, estimated at about $608 million a year, by repealing a 1965 constitutional amendment that allows residents to deduct federal tax payments off their state income taxes, a provision that benefits the wealthiest in the state.
“We are here today because Alabama is one of only three states, along with Mississippi and South Dakota, with no tax breaks on groceries, and that is a shame,” Coleman said.
The proposal is similar to an approach championed for years by former Rep. John Knight, D-Montgomery. It would require a constitutional amendment that voters would have to approve at a future election.
The legislators made their proposal at an event organized by Alabama Arise, a social justice nonprofit, who has been working to eliminate the grocery tax for several years because of its impact on lower-income families, especially in times of heightened inflation.
The conservative Alabama Policy Institute also wants the tax eliminated.
The tax has been in place since Alabama instituted a sales tax in 1939. The state is one of only 13 states to tax groceries, and one of only three to tax them fully. Combined with local levies, a household that spends $500 each month on groceries can spend up to $50 in taxes on food.
Taxing groceries has been a focus for Alabama Arise because it is one of the most regressive forms of taxes that can be levied. The more money that a household earns, the less of an impact the tax has. It is especially problematic for low-income households who spend a greater share of their income on essentials.
Alabama Arise Communications Director Chris Sanders said repealing the state deduction would increase revenues by $900 million, more than making up for the loss from the repeal.
“We are encouraged by multiple proposals,” said Robyn Hyden, the organization’s executive director. “Not just from the two women up here today, but from multiple proposals to solve this problem. As you have heard, the time is now, and we cannot wait.”
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The legislature’s education budget chairs have proposed their own tax reductions. Rep. Danny Garrett, R-Trussville and Sen. Arthur Orr, R-Decatur, have filed legislation that would eliminate the tax on items covered in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). Their bill would reduce the state grocery tax by a percentage point every other year so long as the state’s educational trust fund increases by 5% each year.
Orr has said he will meet with his colleagues about possible measures for either eliminating or reducing the tax.
“We certainly have our preferred versions, but as the lawmakers were saying earlier, we want a version to pass this year,” Sanders said. “We want meaningful, lasting relief for families this year.”
Updated at 4:48 p.m. to clarify that Coleman is filing a separate bill from McClammy and Jones.
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