HUNTSVILLE, Ala. (WHNT) – The Alabama Republican party and the leaders of Alabama’s Democratic party have both come out in support of repealing the 4 percent state sales tax on groceries.
There have been calls for several years for a repeal, but this year may be different, with Republican Lt. Gov. Will Ainsworth also calling for a repeal.
Alabama, Mississippi, and South Dakota are the only states that apply a full sales tax on groceries.
Alabama’s grocery tax revenues go to the state’s education budget, which reported a nearly $3 billion dollar surplus.
Senator Arthur Orr of Decatur chairs the Senate Budget Committee. Orr said he will introduce a grocery tax reduction measure, but it doesn’t call for the end of the tax on all groceries, and it would phase in over a seven-year period. Basically, cutting 1 percent a year, every other year, until the repeal is complete.
Orr spoke to News 19 about the proposal and how the climate in Montgomery has changed in favor of a grocery tax cut.
“The idea that we may do something about the grocery tax is certainly the highest that I’ve ever seen or heard,” Orr said. “The legislators appear unified in wanting to do something about it. So, it shows the most promise that I’ve seen in my tenure in the legislature.”
Orr said using the federal SNAP benefits model, essentially anything that a person can put in their mouth except chewing tobacco and alcohol – would mean about an 8 percent reduction in the state’s tax revenue for education – between $650-$700 million annually. Orr said he favors the WIC benefits federal standard for what should be taxed
“Those are foods that are deemed essential, and by that, it’s all fresh produce, fresh fruits, dairy, milk, cheese butter, some canned foods, canned meats, things like that, eggs,” he said. “he state portion of the sales tax on that is around $220 million, $240 million dollars, all in.”
But it would take time, starting with the first 1 percent cut on Jan. 1, 2024.
“A good place to start, a quarter of a billion dollars once it’s all in,” he said. “I think it’s much more manageable for us to digest at the state level, particularly when we’re talking about important education dollars.”
There are local sales taxes on groceries in Alabama as well. For example, 4.5 percent combined between Huntsville and Madison County. Orr said a state grocery tax cut measure would be designed to bar those figures from increasing.
It would “prevent cities and counties from coming in and grabbing the four cents we would remove off whatever type groceries we decide we remove them from,” he said.
Governor Kay Ivey’s budget proposal includes a one-time tax rebate — but does not call for a grocery tax cut.
Gina Maiola, Ivey’s communications director, told News 19 the governor is open to various options.
“Times are certainly tough for Alabamians and people from all over the country, and as Governor Ivey has said, she is committed to providing relief for our Alabama families. She is always open to ideas, discussions and solutions to help the people of our state.”