In a press conference Friday, Governor Bentley announced his revenue plan.
“The most serious issue we face is the funding of our general fund,” said Bentley.
The governor said tax increases are not ‘popular’ with him, but they are the answer to a $700 million shortfall in the fund.
“As a doctor, the dangers of cigarettes and the people of Alabama are deadly,” Bentley began.
As a state leader, he wants to raise the tax to $1.25 per pack on cigarettes. It’s the weightiest part of his plan — projected to bring $200 million back into the general fund budget.
Another $200 million, he says, can come from taxes in car sales.
“Compared to surrounding states, the sales tax for automobile purchases in Alabama is low,” said Governor Bentley. “I am proposing to increase the rate for automobile purchases to 4%.”
That rate is still lower than that of all surrounding states. Automobile rental tax being pushed to 4% is also part of the plan.
Other proposals included the following:
Combined Reporting: Close the financial loopholes that allow international and national corporations to avoid paying their fair share
Financial Institution Excise Tax: Removing the Financial Institution Excise Tax that allows banks to receive a credit for sales tax paid.
Insurance Premium Tax: Removing the credits that allowed with the Insurance Premium Tax that allows insurance companies to reduce the amount of taxes they pay.
Public Utility License Tax: Removing the exemption that keeps municipalities rom paying Utility License Tax if they provide utilities (power, water, etc.) to their residents.
Individual Income Tax: Ending the practice of tax withholding exemption certificates that lead to working individuals failing to file tax returns.
This plan will generate $541 million. Governor Bentley’s plan sets to fill the remaining void by unearmarking $187 million in revenue.
Read Governor Bentley’s prepared statement here.