Sponsor(s):
HB 215 - Rep. Craig Ford and 17 others

SB 129 - Sen. Wendell Mitchell and 10 others

Summary/Synopsis: This bill would propose an amendment to the Constitution of Alabama of 1901, to prohibit the imposition of an occupational tax by a county or a municipality after January 1, 2010.
(companion bills)

League Action & Justification: LWVAL opposes HB 215 and SB 129. While League does not advocate an occupational tax, its positions support home rule and statutory authority, not constitutional authority, on taxation.

Bill Progress in the Legislature:
HB 215 - 1st reading: 1/12/10 and assigned to 4/13/2010: 2nd read and placed on calendar; 4/14/2010: Indefinitely postponed.

SB 129 - 1st reading: 1/12/10 and assigned to

Sponsor(s): Rep. John F. Knight and over 40 other members

Summary: Proposed amendment to the Constitution of Alabama of 1901 to repeal Amendment 225, to limit the state income tax deduction for federal income taxes for individual taxpayers; and to exempt sales of food from state sales tax.

Provisions:

For all tax years beginning after December 31, 2010, federal income taxes allowed as a deduction for individual income taxpayers, subject to the new limitations:

      (1) For single, married filing separately, and head of household taxpayers with adjusted gross income of $50,000 or less, and for married taxpayers filing jointly with adjusted gross income of $100,000 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 $50,000, the federal income tax deduction shall be reduced by an amount equal to 1% of federal income taxes paid or accrued for each $1,500 of adjusted gross income in excess of $50,000.

      (3) For married taxpayers filing jointly with adjusted gross income of more than $100,000, the federal income tax deduction shall be reduced by an amount equal to 1% federal income taxes paid or accrued for each $3,000 of adjusted gross income in excess of $100,000.

Beginning January 1, 2011, the sale of food shall be exempt from state sales tax. Local governments shall continue to levy sales taxes on food at the same rate collected for the local portion of the retail sales tax.

A section of the amendment defines “food” to mean the definition used in the Federal Food Stamp Act, states food does not include “candy” or “soft drinks” (both of which are defined in the constitutional amendment) and declares that if the federal law no longer exists, the Legislature will define food by general law.See Bill Progress for bill substitute.

League Action & Justification: LWVAL is monitoring HB 1. The League position on Tax Reform supports elimination of the sales tax on groceries but it also supports other reforms. The bill does not improve the situation relative to those issues. It continues to place inappropriate material in the state constitution.

Bill Progress in the Legislature:
1st Read: 1/12/10 and assigned to 3/31/2010: listed on Education Appropriations meeting agenda, Rm. 617, 9:30 a.m.
4/1/2010: 2nd read and placed on calendar with one substitute (119309-4), pending 3rd read and favorable from Education Appropriations.
Note: The substitute represents major changes in the bill.
Under “provisions” specifying the conditions for deducting the federal income tax, the amounts in item (1) are changed from $50,000 to $100,000 respectively; in item (2) from $50,000 to $100,000 and the 1% reduction would now apply to each of $500 instead of $1,500; and in item (3) the $100,000 is changed to $200,000 and 1% would apply to each $1,000 instead of each $3.000.

The sales tax emption would now apply to all food regardless of where or how it is sold, and the definition of food is now based on the federal Supplemental Nutrition Assistance Program definition. Over-the-counter drugs would now be exempt from sales taxes. There is a long definition of what is and is not an over-the-counter drug.

Lastly, the new bill explicitly states that local government sales taxes on food and over-the-counter drugs would be permissible only if the sales tax is not limited to these two categories.

A fiscal note is now available and places the impact of the substitute as reducing sales tax collections to the Education Trust Fund by $405M and raising income tax collections to the ETF by $407M.

4/14/2010: Indefinitely postponed; pending 3rd read and favorable from Education Appropriations with one substitute.

Sponsor(s): Sen. Scott Beason

Summary/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 provide that the state sales and use taxes on food would be reduced by one percentage point per year at the beginning of each fiscal year after the Education Trust Fund has a three percent growth in revenue. This bill would provide that counties and municipalities may not increase their sales and use tax rates on food over the rates in effect on the effective date of this act.
League Action & Justification: LWVAL is monitoring SB 248.

Bill Progress in the Legislature:
1st reading: 1/14/10 and assigned to

Sponsor(s): Rep. Jay Love and Rep. Gerald Allen

Summary/Synopsis: Under existing individual income tax law, Alabama has relatively small allowances for both personal and dependent exemptions and also a low allowance for the optional standard deduction taken in lieu of itemized deductions. As a result of these low amounts, the state imposes individual income tax on a family of four beginning at $12,600 of Alabama adjusted gross income. If the below specified conditions occur, this bill would gradually increase the personal and dependent exemptions and raise the adjusted gross income phase-out of the optional standard deduction over a five-step period to increase the threshold at which the state imposes individual income tax. In the event that the growth in the Education Trust Fund equals or exceeds three percent (3%) annually as certified by the Department of Finance, this bill provides for the gradual increase in the personal and dependent exemptions, and raises the current phase-out amounts relative to the optional standard deduction over a five-step period in order to increase the threshold at which the state imposes individual income tax. However, no enhanced exemption or deduction amounts shall be allowed for those individuals with adjusted gross income in excess of $100,000.
League Action & Justification: LWVAL is monitoring HB 83.

Bill Progress in the Legislature:
1st reading: 1/12/10 and assigned to

Sponsor(s): Rep. H. Mac Gipson, Jr.

Summary/Synopsis: Under current state sales tax law, medicines prescribed by a physician and subsequently filled by a licensed pharmacist are exempt from sales taxation. Certain items which are more commonly recognized as "Over-the-Counter" medications, that are being purchased with increasing frequency by individuals for medically related uses often place a financial burden on their users. In order to grant tax relief for the rising cost of obtaining certain medically necessary products, this Act would provide further sales tax exemptions.
League Action & Justification: LWVAL is monitoring HB 88.

Bill Progress in the Legislature:
1st reading: 1/12/10 and assigned to

Sponsor(s): Rep. Greg Canfield

Summary/Synopsis: Current state individual income tax law provides for the exemption of retirement income derived from "defined benefit" pension plans. However, the same provision is not currently available for "defined contribution plans." For tax years beginning after December 31, 2010, this Act would annually phase in, if certain conditions are attained, an increasing exemption up to a maximum of $10,000 of payments made to a retiree or designated beneficiary under a "defined contribution plan," as defined in Section 414(i) of the Internal Revenue Code, as amended from time to time.(companion bills)

League Action & Justification: LWVAL is monitoring HB 94 and HB 98.

Bill Progress in the Legislature:
HB94 - 1st reading: 1/12/10 and assigned to HB98 - 1st reading: 1/12/10 and assigned to

Sponsor(s): Sen. Trip Pittman

Summary/Synopsis: This bill provides for legislative findings; prohibits public funds from being passed through from one entity to another at the direction of a member of the Legislature; defines "pass-through" appropriations; expressly protects the right of a legislator to lobby for or offer support for a legal and valid program of an agency; provides for reporting of grants; and provides penalties for violations.
League Action & Justification: LWVAL is monitoring SB 56.

Bill Progress in the Legislature:
1st reading: 1/12/10 and assigned to

Sponsor(s): Sen. Arthur Orr

Summary/Synopsis: A county commission or a municipal governing body may elect, by resolution or ordinance, respectively, to exempt the local sales tax, or a percentage thereof, on food as that term is defined for food stamp purposes in the Federal Food Stamp Act, 7 U.S.C. §2011, et eq. or, in the alternative, as defined by the respective county commission or municipal governing body. Provided, however, the resolution or ordinance to exempt the local sales tax on food is approved by a majority of affirmative votes of the membership of the county commission or municipal governing body at a regularly scheduled meeting.
League Action & Justification: LWVAL is monitoring SB 212.

Bill Progress in the Legislature:
1st reading: 1/12/10 and assigned to