HB130 - State income tax, federal deduction limited for individual taxpayers, state sales tax on food removed, Amendment 225 (Section 211.04, Recompiled Constitution of Alabama of 1901, as amended), repealed, const. amend.

Constitutional Amendment

Sponsor(s): Representative Knight

Summary/Synopsis: The bill would remove the content of Amendment 225 from the Alabama Constitution which reads:
"In computing net income for state income tax purposes for the calendar year 1965 and each year thereafter, a resident individual taxpayer shall be allowed to deduct from his gross income the amount of federal income tax paid or accrued within the taxable year. A nonresident individual income taxpayer shall be allowed to deduct only that amount of federal income tax paid or accrued in the taxable year on income received from sources within the state." Amendment 225 allows use of federal income tax payments as a deduction on the Alabama Income Tax form.

League Action and Justification: Monitor.

This legislation is unlikely to move given previous legislative history on similar bills proposed by its author. However, the League supports removal of regressive taxation such as the sales tax.

Bill Progress in Legislature:

01/14/2014: First Reading and referred to the

green-right-arrow.jpgSB287 - 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.

Sponsors(s): Senator Dial

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 increase the state sales and use tax general rate to four and one-quarter percent on September 1, 2014, to four and one-half percent on September 1, 2015, to four and three-quarters percent on September 1, 2016, and to five percent on September 1, 2017.

This bill would phase out the state sales and use taxes on food over a four-year period by reducing the rates by one percentage point per year beginning September 1, 2014.

This bill would phase out the state sales and use taxes on food sold through coin-operated dispensing machines over a three-year period by reducing the rates by one percentage point per year beginning September 1, 2015.

This bill would exempt sales of food, including food sold through coin-operated dispensing machines, from the sales and use taxes beginning September 1, 2017.
 
League Action and Justification: Monitor

League supports the ending of the sales tax on food. At the same time it advocate for less reliance on regressive taxes. This legislation compensates for the lost revenue from the sales tax on food by increasing the sales tax on nonfood items.

Bill Progress in Legislature:

01/28/2014: First Reading and referred to the
02/26/2014: Read for the 2nd time and placed on the calendar; pending 3rd Read and Favorable from FT&E

04/01/2014: Indefinitely Postponed