MONTGOMERY — The Alabama House of Representatives passed the long-awaited bill to cut the state tax on food in half by 2025.
The bill would define "food" by the Supplemental Nutrition Assistance Program (SNAP), a hotly debated subject in this legislative session. Some lawmakers wanted to use the narrower definitions used in the WIC (Women, Infants and Children) program. Using the SNAP definition will mean more foods are getting taxes slashed.
The bill has 98 House co-sponsors, and every member of the Senate has pledged to support it when it reaches their body.
Education budget committee chairman State Rep. Danny Garrett (R-Trussville) said the amendment was to prevent local governments from "backfilling" local sales tax with what is taken away from the state.
The amendment said a municipality or county may not increase the sales tax on food following the bill's passage.
There seemed to be an appetite in the House to place a time limit where a local government could change the food tax. However, two amendments failed to pass: one to remove local government restrictions and one to place a five-year moratorium on raising food taxes.
Beginning September 1, the tax rate will be reduced to 3%. On Nov. 1, 2025, it will be dropped down to 2%, provided, however, there is at least 2% growth in the Education Trust Fund (ETF) from the previous fiscal year. ETF revenue growth historically averages about 3.6% annually, according to the Public Affairs Research Council of Alabama. Once fully implemented, the plan would reduce state tax revenue in the ETF by $304 million.
The House version differs slightly from the Senate's, but House Speaker Nathaniel Ledbetter does not anticipate many substantive changes when the bill goes to the Senate.
"I think it's pretty well established," Ledbetter said. "I think there is a possibility to tweak it some."
He continued, "So the people of Alabama will see some results pretty quick, and I'm kind of excited about that, to be honest with you because they deserve it. The times we've had with inflation, I think the timings good."
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