On Friday, Lt. Gov. Will Ainsworth said that he was working on legislation to reduce the state’s grocery tax.
Ainsworth said on Twitter on Friday morning 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.”
“With a budget surplus of almost $3 billion, we must take action now because the families of Alabama deserve it,” he added.
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 on Tuesday that she wanted lawmakers to pass a one-time tax rebate for individuals in the 2023 legislative session.
"I am calling on you to put nearly a billion dollars back into the hands of hardworking, taxpaying Alabamians through one-time rebates of $400," Ivey stated. "That means $800 for our working families, and it couldn't come at a better time."
Alabama House Democrats said at a press conference on Monday that they were in favor of eliminating the state’s sales tax on groceries.
"Those individuals that think this is too much of a hit on the front end, then let's do a payroll tax month to test it," House Minority Leader Anthony Daniels (D-Huntsville) said. "June of 2023, do a month-long (test) of no tax on groceries. Once the receipts come in for the growth in the Education Trust Fund, you compare it to the previous year, and then it will tell us if whether or not what we're saying is accurate. I don't believe there's going to be a hit because they're going to spend money in other areas."
State Sen. Sam Givhan (R-Huntsville) told WVNN’s “The Dale Jackson Show” that there are many lawmakers who prefer a tax cut over a one-time rebate.
“There’s a large contingent that wants nothing in terms of rebates,” Givhan said on Thursday. “They want either permanent or at least temporary tax relief across the board.”
Alabama is one of just 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%.
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