Mayors from across the state of Alabama continued pushing for changes to Alabama’s online sales tax law after a meeting in Tuscaloosa on Monday.
The Alabama Big 10 Mayors called the current online sales tax law “flawed.”
“Today’s meetings with municipalities across the state further reinforced the fact that there is a growing consensus to address our state’s unfair online sales tax structure,” said the Alabama Big 10 Mayors in a statement. “Its current structure is a problem for Alabama — it’s bad for municipalities, bad for schools, and bad for small businesses. This issue must be addressed, whether through the courts or through the legislature. Every day the system continues to exist in its current form is another day where our schools, first responders and communities are losing the resources that they depend on and are rightly theirs.”
The City of Tuscaloosa announced recently that it plans to sue the State over how Alabama’s online sales tax law is divided up between counties and municipalities. Mayor Walt Maddox estimated that Tuscaloosa will lose $14.6 million in the current fiscal year due to the structure of the online Simplified Sellers Use Tax, which was passed into law by the legislature in 2015.
The Simplified Sellers Use Tax (SSUT), an 8% tax on online purchases, is distributed by the State, with 50% going to state funds and the remaining 50% allocated to local governments (cities and counties). Within the state's share of the distribution, the General Fund receives 75% and the Education Trust Fund receives 25%. Within the local share, municipalities receive 60% of the revenue and counties receive 40%. The revenue going to each municipality and county is divided up based on population.
Alabama’s combined state and average local sales tax rate is 9.43%, according to the Tax Foundation.
The Alabama Big 10 Mayors said, “For many Alabamians, Alabama law makes it less cost-effective to shop locally. Put simply, this two-category taxation system benefits large out-of-state corporations such as Amazon and Walmart at the expense of Alabama small businesses — the businesses that make up the backbones of our communities.”
The group includes Auburn Mayor Ron Anders, Birmingham Mayor Randall Woodfin, Decatur Mayor Tab Bowling, Dothan Mayor Mark Saliba, Hoover Mayor Frank Brocato, Huntsville Mayor Tommy Battle, Madison Mayor Paul Finley, Mobile Mayor Sandy Stimpson, Montgomery Mayor Steven Reed, and Maddox.
Sonny Brasfield, executive director of the Association of County Commissions of Alabama, told 1819 News on Monday, “We believe the claims of lost revenue are greatly exaggerated. For example, the critics claim internet sales are 16 percent of total sales tax collections. And that number is correct on a national basis. But if you bother to look at the revenue received from SSUT, you’ll see that in Alabama, internet sales are only 10.15 percent of sales tax collections.”
“This small 'mistake' means the estimated losses published by the detractors are more than 60 percent inflated. And that’s just one problem with their efforts,” Brasfield said. “The information shared in Tuscaloosa today outlines 'losses' from sales shifting to online retailers. But the information fails to inform the listeners that cities receive funding from all online sales statewide — not just from those sales that occur within their municipal limits. This detail also inaccurately inflates the information being distributed by the critics. Alabama’s program is recognized nationally as the most efficient and constitutionally sound program for collecting use tax from those customers who order from out-of-state companies. The program is clearly within the guidelines imposed by the United States Supreme Court in the South Dakota v. Wayfair case. No one can question that fact.”
He added, “Counties will actively and strongly oppose any proposals that put the constitutionality of the program in question or that attempt to change the population formula used to allocate the county share of the revenue. The revenue from SSUT is too important for the state of Alabama and for county government to allow these exaggerated claims to put the program in jeopardy.”
To connect with the author of this story or to comment, email [email protected].
Don't miss out! Subscribe to our newsletter and get our top stories every weekday morning.
