Tax Reform

LWVAL Action Priority Level III - Issues identified by LWVAL Advocacy Committee and/or State Board or Local Leagues. Monitoring occurs; action dependent on opportunity and available resources.

Click a bill to see sponsor(s), synopsis, link to the bill, League action and justification for that action, and progress of the bill through the legislative process.

Legend:
thumbs_up_icon.jpg = LWVAL's support for the legislation.
thumbs_down_icon.jpg = LWVAL's opposition to the legislation.
green-right-arrow.jpg = new bill activity; change from previous week's report such as new progress in the legislature and/or League action. Bill may be one newly added to the report. These updates are in green font.

Contact information for legislators and committees referenced in the bills below:
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LWVAL has taken a position on these bills:

thumbs_up_icon.jpgHB44 - Sales and use tax on food, exempt from, beginning September 1, 2017

Sponsor(s): Representative Knight

Synopsis: Under existing law, the state imposes sales or use taxes upon certain persons, firms, or corporations. Sales of certain items are taxed at a reduced rate. Sales of other items are exempt from the taxes.

This bill would exempt sales of food from the sales and use taxes beginning September 1, 2017. It defines food as it is defined in the federal Supplemental Nutrition Assistance Program (NAP) regardless of where or by what means food is sold and gives the legislature the power to define should the NAP no longer exist.

Local governments would continue to collect sales taxes on food at the same rate collected for the local portion of the retail sales tax.

[Note: A governor’s task force has been created to examine the issue of eliminating the state tax on groceries and offering recommendations. It has a June 1st deadline to report to the governor. There is a long history in this state of creating governor’s task forces to investigate an issue and/or make recommendations to the governor. Often, the task force has done little if any work, but the governor reaps positive publicity for its creation. And, while a task force has been named, the legislature has tended not to act on the issue in question.

The sales tax issue itself has been introduced in the legislature in a variety of forms for the past several years. Most of the time, such a bill has not reached the floor of either house.]


League Action and Justification: Support. League supports a state tax system that is broad, equitable and efficient for the taxpayers of the state and that balances regressive and non-regressive taxes. It also believes: “The present mix of Alabama's taxes should be changed so that there is more reliance on property tax and income tax and less reliance (dependence) on general and selective sales taxes.” Sales taxes are regressive and take a disproportionate share of income from lower income families.

Bill Progress in Legislature:
02/07/2017:
First Read and assigned to House committee on Ways & Means Education (W&ME)

thumbs_down_icon.jpgHB303 - Sales and use tax on food, reduced by one-percent, beginning October 1, 2017

Sponsor(s): Representative Wadsworth

Synopsis: The synopsis on ALISON says: “This bill would reduce by one percent the sales and use taxes on food beginning October 1, 2017.” However] the bill itself reads: “Notwithstanding any other provision of law, for taxable periods beginning on and after October 1, 2017, state sales and use taxes on food shall be one percent less than the sales on tax on nonfood items. [Emphasis added.]

The bill would go into effect upon passage and signature by the governor.


League Action and Justification: Oppose. If the sales tax on nonfood items is raised, bill wording has the food sales tax increasing as well. And, this still represents reliance on a regressive tax which League opposes.

Bill Progress in Legislature:

02/23/2017: First Read and Referred to the House committee on Ways and Means Education (W&ME)

green-right-arrow.jpgthumbs_up_icon.jpgHB468 - Coal, severance tax, add'l, distrib for operation of Surface Mining Commission, termination of tax

Sponsor(s): Representative South

Synopsis: Coal Severance Tax -- The purpose of the tax increase is to provide the 50% match required to access the federal Office of Surface Mining funds to help fund the Alabama Surface Mining Commission. The fiscal note states: House Bill 468 as introduced would levy an additional coal severance tax of $0.025 per ton on coal produced from underground mining and $0.05 per ton on coal produced from surface mining, on an amount not to exceed two million tons of coal mined per company each year, to be deposited into a special fund in the State Treasury to be used exclusively for the operation of the Surface Mining Commission. This additional tax could increase receipts to the Commission by an estimated $209,000 per year. Additionally, it could increase the receipts to the State General Fund for any civil penalties assessed resulting from violations of the provisions of this bill not to exceed $1,000 for each offense. It would sunset in two years.


League Action and Justification: Support. With mines going out of business, reducing permit fees, and the limited state General Fund support, the commission is looking for additional ways to fund itself. This appears to be an appropriate resource to tap to fund regulation. In the LWVAL position on constitutional reform, there is language regarding taxation that may cover this situation. For example: “The taxation and finance provisions in the constitution should provide for the flexibility to address changing conditions, an equitable distribution of the tax burden, and the economical use of the state’s financial resources.” And “With the prerequisite of an open accountable legislature, responsive to all the people, the legislature should be allowed flexibility in tax decisions to meet changing needs through statutory law rather than constitutional amendment.”

Bill Progress in Legislature:

03/18/2017: Read for the first time and referred to the House committee on Ways and Means General Fund W&MGF

04/11/2017: 2nd Read and placed on the calendar; Pending third reading and Favorable from W&MGF Fund

LWVAL is monitoring these bills:

SB227 - State sales and use tax increased, phase-in period, sales and use tax on food phased out, exempt by 2017, counties and municipalities prohibited from increasing sales tax on food, Secs. 40-23-2, 40-23-61 am'd.

Sponsor(s): Senator Dial

Synopsis: Under existing law, the state imposes sales or use taxes upon certain persons, firms, or corporations. Sales of certain items are taxed at a reduced rate and sales of other items are exempt from the taxes.

This bill would increase the state sales and use tax general rate to four and thirty-five one-hundredths percent (4.35%) on September 1, 2017 and to four and seventy one-hundredths percent 4.70%) on September 1, 2018.

This bill would phase out the state sales and use taxes on food over a two-year period by reducing the rates by two percentage points per year beginning September 1, 2017. It would exempt sales of food from the sales and use taxes beginning September 1, 2018.


League Action and Justification: Monitor. While League supports elimination of the sales tax on food, this bill would still have the state rely heavily on the sales tax as a revenue source rather than seek additional funds from less regressive taxes.

Bill Progress in Legislature:

02/21/2017:
First Read and referred to the Senate committee on Finance and Taxation Education (F&TE)


SB232 Constitutional Amendment - State income tax, federal deduction limited for individual taxpayers, state sales tax on food and over-the-counter drugs removed, Amendment 225 (Section 211.04, Recompiled Constitution of Alabama of 1901, as amended), repealed, const. amend.

Sponsor(s): Senator Sanders

Synopsis: This bill would propose an amendment to the Constitution of Alabama of 1901, to repeal Amendment 225 of the Constitution of Alabama of 1901, now appearing as Section 211.04 of the Official Recompilation of the Constitution of Alabama of 1901, as amended.

The amendment would limit the state income tax deduction for federal income taxes for individual taxpayers; exempt sales of food and over-the-counter drugs from state sales tax; and prohibit local governments from levying separate sales taxes only on the sale of food or over-the-counter drugs.

For all tax years beginning after December 31, 2017, federal income taxes paid or accrued shall be allowed as a deduction for individual income taxpayers, subject to the following limitations:
  1. For single, married filing separately, and head of household taxpayers with adjusted gross income of $100,000 or less, and for married head taxpayers filing jointly with adjusted gross income of $200,000 or less, all federal income taxes paid or accrued shall be allowed as a deduction.
    2 For single, married filing separately, and head of household taxpayers with adjusted gross income of more than $100,000, the federal income tax deduction shall be reduced by an amount equal to 1.0% percent of federal income taxes paid or accrued for each $500 of adjusted gross income in excess of $100,000.
    3 For married taxpayers filing jointly with adjusted gross income of more than $200,000, the federal income tax deduction shall be reduced by an amount equal to 1.0% of federal income taxes paid or accrued for each $1,000 of adjusted gross income in excess of $200,000.


League Action and Justification: Monitor. LWVAL supports greater reliance on progressive taxes to raise state revenue. This bill is a step forward, but similar legislation has failed to move in the legislature and no information is yet available on the revenues the bill would raise.


Bill Progress in Legislature:

02/21/2017: First Read and referred to the Senate committee on Finance and Taxation Education (F&TE)


SB230 - Appropriation process, shared revenue fund established, distribution of certain revenue above amount of revenue in the General Fund and Education Trust Fund prior to act

Sponsor(s): Senator Sanford

Synopsis: This bill provides for the establishment of the Alabama Shared Revenue Fund and provides for the distribution of the proceeds of the shared revenue sources of the Education Trust Fund and the State General Fund. The Shared Revenue Fund shall be separate from the Education Trust Fund and the State General Fund. Initially, all shared revenues dedicated by statute or otherwise for the Education Trust Fund and the State General Fund will be deposited into the Shared Revenue Fund. Monthly distributions from the new fund would be 78.0% to the Education Trust Fund and 27.0% to the State General Fund.


League Action and Justification: Monitor. Currently, we are unable to assess the impact this bill have would have on revenue divisions..


Bill Progress in Legislature:

02/21/2017: First Read and referred to the Senate committee on Finance and Taxation Education (F&TE)

green-right-arrow.jpgHB454/SB360 - Alabama Public Transportation Trust Fund, established, ADECA required to administer trust fund; Public Transportation Trust Fund Advisory Committee, created.

HB454 Sponsor(s): Representative Williams
SB360 Sponsor(s): Senator Smitherman

Synopsis: Establish a Public Transportation Trust Fund, administered by ADECA, and provide for a Public Transportation Trust Fund Advisory Committee. The purpose of the bill is laudable – to “fund activities that increase public transportation options across the state”. The source of the funds is less clear – “designated funds appropriated by the Legislature or collected from grants or other sources for the purpose of increasing public transportation options across the state of Alabama”. The procedures spelled out for transparency appear adequate and the makeup of the 9-member advisory committee includes a balance of elected officials and representatives of low income and disability populations.


League Action and Justification: Monitor. Our position on public transportation states “the state of Alabama, like most other states, should share in the fiscal responsibility for providing public transportation as it does for highway construction.” However, these bills are vague about the source of funding and don’t specifically require the state to provide any funding from gasoline taxes, which is our position. They haven’t moved since first read. However, the fact that these bills were introduced is encouraging.

Bill Progress in Legislature:

HB454

04/04/2017: First read and referred to House committee on Transportation, Utilities and Infrastructure (TU&I); 2nd 04/20/2017: Read and placed on the calendar with 1 Amendment (185541-1); pending 3rd Read and Favorable from TU&I with 1 Amendment; TU&I 1st Amendment Offered;

[NOTE: The amendment alters the membership of the advisory committee by removing some members and more members nominated by groups that use or advocate for users of public transportation.]


SB360

04/06/2017: Read for first time and referred to Senate committee on Transportation and Energy (T&E)



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