The state sales tax on some groceries would be gradually eliminated under legislation filed on Tuesday.
House Bill 250 sponsored by State Rep. Danny Garrett (R-Trussville) would reduce the sales tax on some groceries to 3% on Sept. 1 and “on November 1, 2025, and on November 1 of every odd-numbered year thereafter until the tax rate is zero, the tax rate shall be reduced by one percent.” The bill allows for the gradual reduction of the tax to be paused “if the growth in total net receipts from all revenue sources to the Education Trust Fund in the preceding two fiscal years was at least five percent more than the last odd-numbered fiscal year.”
The proposal would use the Women, Infants, and Children (WIC) program's definition of food. Another possible proposal will use the Supplemental Nutrition Assistance Program (SNAP) program definition.
WIC's definition includes eggs, milk, canned fish, juice, cheese, yogurt, fruits, vegetables and whole grain bread.
The SNAP definition includes more foods, including fruits and vegetables; meat, poultry and fish; dairy products; bread and cereals; other foods, such as snack foods and non-alcoholic beverages, according to the United States Department of Agriculture.
House Minority Leader Anthony Daniels (D-Huntsville) has said he prefers using the broader SNAP definition of food.
Lost state revenue annually from repealing the sales tax on groceries with the WIC definition would be "about $250 million," and the SNAP definition would be "well over $600 million," once the repeal is fully implemented, according to State Sen. Arthur Orr. (R-Decatur).
The state currently has an approximately $3 billion surplus. Alabama has the fourth-highest state and local combined sales tax rate in the nation. 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%. Alabama is one of just a few states that taxes groceries at the full state sales tax rate.
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