MONTGOMERY — The Senate unanimously passed amended legislation that would cut the state's sales tax on groceries by 2% on Thursday.

Currently, the state's sales tax rate on groceries is 4%. 

House Bill 479 by State Rep. Danny Garrett (R-Trussville), as amended, would drop the rate by 1% in September automatically and an additional 1% as soon as September 2024, 2025 or a later year if the state projects 3.5% growth in the Education Trust Fund (ETF) for the next fiscal year. The average growth rate in the ETF annually is 3.6%, according to the Public Affairs Research Council of Alabama.

The biggest change to the bill in the amendment is requiring 3.5% growth in the ETF instead of 2% and allowing for the second cent to be taken off the state portion of the grocery tax in 2024 if those growth projections are met. 

According to a fiscal note on the legislation, the tax cut would reduce revenue in the Education Trust Fund by $318 million annually once fully implemented. State government had a combined $3 billion surplus heading into the session.

State Sen. Andrew Jones (R-Centre) said after the vote on Thursday that one aspect of the negotiation on the amendment with Education Budget chair State Sen. Arthur Orr (R-Decatur) was to possibly get the second cent to be taken off the grocery tax in 2024 in exchange for an increased ETF growth requirement.

“3.5 percent is roughly the average growth rate over the last 20 years so we’re just saying that the ETF has to grow at or better than average for this drawdown to take place,” Jones said. “This is going to be great for working Alabamians. Folks are struggling to put food on the table.  I hear from constituents all the time that they’re paying more for grocery taxes. I’ve said it once. I’ll say it again grocery tax receipts have gone up not because tax rates have changed but because inflation and prices on food have gone up and people are paying more in taxes. That’s untenable. Folks are trying to make ends meet for their families. This bill helps address that.” 

Since the legislation was amended, it will have to be passed again in the House.

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