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Tax Reform
LWVAL Action Priority Level II - Monitoring occurs; action dependent on opportunity and available resources.Click a bill to see sponsor(s), summary (including link to full text), League action and justification for that action, and progress of the bill through the legislative process.
Legend:
= LWVAL's support for the legislation. 
= LWVAL's opposition to the legislation.
= 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.LWVAL has taken a position on this bill:
HB306 - Sales and use tax on food, exempt from, beginning September 1, 2015
Sponsor(s): Representatives Knight, Daniels, Clarke, Robinson, Moore (M), Rogers, Forte, Lawrence, Coleman, Drummond, McClammy, Holmes (A), England, Warren, Scott and Hall
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 exempt sales of food from the sales and use taxes beginning September 1, 2016 regardless of where or by what means the food is sold. Local governments shall continue to collect sales taxes on food at the same rate collected for the local portion of the retail sales tax.
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:
02/24/2016: First Reading and referred to the House Committee on Ways and Means Education (W&ME).
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 exempt sales of food from the sales and use taxes beginning September 1, 2016 regardless of where or by what means the food is sold. Local governments shall continue to collect sales taxes on food at the same rate collected for the local portion of the retail sales tax.
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:
02/24/2016: First Reading and referred to the House Committee on Ways and Means Education (W&ME).
LWVAL is monitoring these bills:
SB15 - Taxation, state tax revenues, distribution further provided for, Secs. 9-13-84, 22-9A-23, 22-21-24, 27-4A-3, 28-3-74, 28-3-184, 28-3-201, 28-3-202, 28-3-204, 28-7-16, 38-4-12, 38-4-12.1, 38-4-13, 40-1-31, 40-8-3, 40-21-51, 40-21-87, 40-23-35, 40-23-50, 40-23-77, 40-25-23 am'd.
Sponsor(s): Senator Ward
Summary/Synopsis: This legislation contains many changes in the manner in which legislative earmarked funds are apportioned for distribution. Many funds are abolished with their revenues transferred to the general fund or to a new fund created for funding a specific department rather than a specific area within that department. In at least one instance the apportionment formula decreases the amount going to education and increases monies to the general fund.
League Action and Justification: Monitor for continued evaluation.
While LWVAL supports the end of earmarking, portions of the bill simply alter earmarks rather than end them. Other sections add monies to the General Fund which would aid in funding essential state services which is a League priority. It also is not comprehensive tax reform but a patch. We will monitor the bill’s progress and examine the budgetary impacts more fully.
Bill Progress in Legislature:
02/02/2016: Scheduled for first read and assignment to the Senate Committee on Finance and Taxation General Fund (F&TGF).
02/17/2016: 2nd Read and placed on the Calendar with 1 Amendment (173726-2); pending 3rd Read and Favorable from FT&GF with 1 Amendment; F&TGT 1st Amendment offered.
04/28/2016: Indefinitely postponed.
Summary/Synopsis: This legislation contains many changes in the manner in which legislative earmarked funds are apportioned for distribution. Many funds are abolished with their revenues transferred to the general fund or to a new fund created for funding a specific department rather than a specific area within that department. In at least one instance the apportionment formula decreases the amount going to education and increases monies to the general fund.
League Action and Justification: Monitor for continued evaluation.
While LWVAL supports the end of earmarking, portions of the bill simply alter earmarks rather than end them. Other sections add monies to the General Fund which would aid in funding essential state services which is a League priority. It also is not comprehensive tax reform but a patch. We will monitor the bill’s progress and examine the budgetary impacts more fully.
Bill Progress in Legislature:
02/02/2016: Scheduled for first read and assignment to the Senate Committee on Finance and Taxation General Fund (F&TGF).
02/17/2016: 2nd Read and placed on the Calendar with 1 Amendment (173726-2); pending 3rd Read and Favorable from FT&GF with 1 Amendment; F&TGT 1st Amendment offered.
04/28/2016: Indefinitely postponed.
SB16 - 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
Summary/Synopsis: This bill provides for the establishment of the Alabama Shared Revenue Fund that is separate from the General and Education Trust Funds and provides for the distribution of the proceeds of the shared revenue sources of the Education Trust Fund and the State General Fund initially into this fund to be allocated to the Education Trust Fund and the State General Fund based upon the percentages established in this bill – 78% to General Fund and 22% to the Education Fund. [Emphasis added]
League Action and Justification: Monitor for continued evaluation.
As with SB15 this bill is another patch of the revenue raising system and continues earmarking. Our positions do not support earmarked funds. League supports adequate funding of all essential state services, including education. We will monitor the bill’s progress and examine the budgetary impacts more fully.
Bill Progress in Legislature:
02/02/2016: Scheduled for first read and assignment to the Senate Committee on Finance and Taxation General Fund (F&TGF).
Summary/Synopsis: This bill provides for the establishment of the Alabama Shared Revenue Fund that is separate from the General and Education Trust Funds and provides for the distribution of the proceeds of the shared revenue sources of the Education Trust Fund and the State General Fund initially into this fund to be allocated to the Education Trust Fund and the State General Fund based upon the percentages established in this bill – 78% to General Fund and 22% to the Education Fund. [Emphasis added]
League Action and Justification: Monitor for continued evaluation.
As with SB15 this bill is another patch of the revenue raising system and continues earmarking. Our positions do not support earmarked funds. League supports adequate funding of all essential state services, including education. We will monitor the bill’s progress and examine the budgetary impacts more fully.
Bill Progress in Legislature:
02/02/2016: Scheduled for first read and assignment to the Senate Committee on Finance and Taxation General Fund (F&TGF).
SB272 - 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
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-half 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 two-year period by reducing the rates by two percentage points per year beginning September 1, 2016. This bill would exempt sales of food from the sales and use taxes beginning September 1, 23 2017.
League Action and Justification: Monitor
The justification for eliminating the taxes on food found in the bill itself is in line with the League position. The bill states: “The Legislature hereby finds that the requirement to pay sales tax on food places a burden on all taxpayers in the state, especially the less fortunate. The Legislature recognizes the effect on-line purchases has had on tax collections due to inaction by the federal government to act on pending legislation allowing for the collection on on-line sales. The passage of this act would have a positive impact on state tax collections on general merchandise which would help offset the elimination of the sales tax on food.”
The problem with the bill is that the sales and use taxes are increased on all other goods. League supports “more reliance on property tax and income tax and less reliance (dependence) on general and selective sales taxes.”
Bill Progress in Legislature:
02/18/2016: First Reading and referred to the Senate Finance and Taxation Education (F&TE).
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-half 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 two-year period by reducing the rates by two percentage points per year beginning September 1, 2016. This bill would exempt sales of food from the sales and use taxes beginning September 1, 23 2017.
League Action and Justification: Monitor
The justification for eliminating the taxes on food found in the bill itself is in line with the League position. The bill states: “The Legislature hereby finds that the requirement to pay sales tax on food places a burden on all taxpayers in the state, especially the less fortunate. The Legislature recognizes the effect on-line purchases has had on tax collections due to inaction by the federal government to act on pending legislation allowing for the collection on on-line sales. The passage of this act would have a positive impact on state tax collections on general merchandise which would help offset the elimination of the sales tax on food.”
The problem with the bill is that the sales and use taxes are increased on all other goods. League supports “more reliance on property tax and income tax and less reliance (dependence) on general and selective sales taxes.”
Bill Progress in Legislature:
02/18/2016: First Reading and referred to the Senate Finance and Taxation Education (F&TE).
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