Tax cuts are a better policy than one-time tax rebates, according to Lt. Gov. Will Ainsworth.

That was his message to the Business Council of Alabama’s Government Affairs Committee Tuesday, where he talked about what the state should do with its nearly $3 billion budget surplus.

“I’m not against rebates,” Ainsworth said. “I think that’s a good thing certainly, but I’m going to continue to push that I think tax cuts is a better policy than rebates. Why is that? When people are looking at our state, I want to make sure from a tax policy standpoint that we’re the best in the country. That’s going to continue to drive people here.”

Ainsworth said on Twitter two weeks ago that “it’s time to permanently reduce the tax burden for all Alabama families, so I am currently working on legislation that will reduce the sales tax on groceries.” 

The state has an approximately $3 billion combined general fund and education trust fund budget surplus after the most recent fiscal year, fiscal year 2022. Legislators and statewide elected officials differ on how to use the surplus. Some want to give taxpayers a one-time tax rebate, some want permanent tax cuts and others want to spend or save the surplus.

Gov. Kay Ivey said at her State of the State address recently that she wanted lawmakers to pass a $400 one-time tax rebate for individuals in the 2023 legislative session.

Alabama is one of a few states that taxes groceries at the full state sales tax rate. According to the Tax Foundation, Alabama has the fourth-highest state and local combined average sales tax rate. Alabama's state sales tax rate is 4%. Alabama's state sales tax rate is the 40th-highest in the nation at 4%. However, the average sales tax rate levied by local governments is the highest in the nation at 5.25%.

In addition to tax relief, Ainsworth also spoke on Tuesday about widening the number of lanes on I-65.

“I’m not going to shut up on that issue until we three-lane that. Let’s all make that a priority and fix that,” Ainsworth said. “We can figure out how to do that. It’s such a problem. When people get stuck on there, it hurts our state.”

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