New polling data shows that Alabamians strongly favor repealing the state’s 4% sales tax on groceries — a permanent tax cut — over one-time rebate checks. The support is widely bipartisan, a rare occurrence in today’s political landscape.
The Alabama Republican Party (ALGOP) commissioned a poll asking voters where they stand on the grocery tax repeal vs. tax rebate debate, 1819 News recently reported. Results were overwhelmingly one-sided. Of the 1,610 registered voters surveyed, 83% supported repealing the grocery tax. Less than half of the survey’s participants supported state government providing a one-time check.
Results were even more lopsided when asked if they prefer the state’s current $2.8 billion Education Trust Fund (ETF) budget surplus be used to eliminate the grocery tax or provide a rebate, with 83% of Republican voters and 80% of registered Democrats preferring the elimination of the grocery sales tax. Independent voters favored the grocery tax repeal by a margin of 78% to 22%.
Alabama is one of only three states imposing the full state sales tax on groceries. Since this is one of the few issues with broad bipartisan support, 2023 should be the year lawmakers finally repeal the grocery tax.
There are several reasons for the shift in preference for the grocery tax repeal over the $400-800 checks. First, the state is in a better financial position now than perhaps ever before to repeal the grocery tax. Most general sales tax proceeds are earmarked for the ETF budget. In 2021, the ETF surplus was almost $1.5 billion. In 2022 that revenue surplus, your excess tax dollars, nearly doubled to $2.8 billion. From 2018-2022, annual ETF surpluses averaged over $1.1 billion. This is in stark contrast to the preceding five-year period when average annual surpluses were just over $100 million.
Despite what some lawmakers say, voters know that state government can afford the revenue loss, which is estimated at somewhere between $200 million to $500 million annually, depending on which version of the grocery tax repeal becomes law.
Alabamians are also acutely aware of what neighboring states and many state legislatures are doing with surplus tax dollars. In 2022, 10 states cut individual income taxes, six states reduced corporate income tax rates, and two states, Kansas and Virginia, enacted legislation to permanently exempt groceries from sales taxes, the Tax Foundation reports. In the Southeast, Mississippi, South Carolina, Georgia, and Florida all enacted permanent tax cuts in 2022, suggesting that Alabama’s government has not gone far enough to provide relief to citizens.
There may also be a degree of rebate fatigue. Over the course of 2020-2021, most Alabamians received a series of tax rebate checks ranging from $1,200 to $1,400 per individual, as well as additional payments for dependents. As those polled by ALGOP likely recognize, that money was often quickly spent and forgotten with not a lot to show for it. Gov. Ivey’s proposed rebate checks are one-third the amount of the smaller of the federal stimulus checks. While they may provide limited relief to some Alabamians, the checks will not have long-term impacts.
Consider that the nearly $1 billion in proposed rebate checks could pay for a full repeal of the sales tax on groceries for almost two years. Every time you walk into a store from now into the future, you will be reaping the benefits of that permanent tax cut.
According to U.S. Department of Agriculture data, a family of four following its lowest cost food plan had an average of $979.40 in monthly grocery expenses during February 2023. That translates to nearly $500 in annual savings for Alabama families by repealing the grocery tax, and that’s on the lowest end of the cost-saving spectrum. In less than two years, a married couple with two children would have their tax burden reduced by more than the amount of the proposed rebate check, and those savings would continue every year.
It is clear to see why Alabama voters strongly prefer repealing the state’s sales tax on groceries over receiving a one-time rebate check. Will lawmakers listen to their constituents?
Justin Bogie serves as Fiscal and Budget Reporter for 1819 News. The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to: Commentary@1819News.com.