MONTGOMERY — Members of the Joint Study Commission on Grocery Taxation met on Tuesday for their first meeting of the quadrennium to begin considering the feasibility of eliminating the state's sales tax on groceries.
State Sen. Andrew Jones (R-Centre), commission chair, told reporters on Tuesday, "I think it was clear from this meeting that we'll obviously know more moving forward as time goes on and more information is available."
"This has only been in effect for a little over two months. We'll know more moving forward. I'm just excited that we're continuing to take gradual steps toward a day when there is no grocery tax in Alabama. We know that definitely 2% is coming. I hope a future where we're at 0% for grocery taxes is on the way so I'm excited about it," Jones said.
Grocery tax cut legislation was passed in the final days of the 2023 legislative session. The law was sponsored by State Rep. Danny Garrett (R-Trussville), and Jones dropped the state's sales tax on groceries by 1% on September 1 automatically and will drop the rate an additional 1% as soon as September 2024, 2025 or a later year if the state projects 3.5% growth in the Education Trust Fund (ETF) for the next fiscal year.
The new law doesn't change grocery tax rates levied by cities and counties.
Historically, the average annual growth rate in the ETF is 3.6%, according to the Public Affairs Research Council of Alabama.
Jones said legislators would know more during the upcoming legislative session in 2024 regarding whether there's enough growth in the ETF projected for the next fiscal year to take a second penny off the state grocery tax rate next year.
"I think we just got to see. Obviously when you're dealing with the economy right now with uncertainty, inflation, it's really hard to gauge all that. I applaud the fiscal office for all they're doing trying to put these numbers together," Jones said. "We'll just see what happens come spring when we're in session (and) see what the report is. If it's not 3.5% this year, we know we'll have another bite at the apple all the way until we hit the magic number. It's not a question of if, it's a question of when."
The commission's final report of its findings, conclusions, and recommendations for any proposed legislation to eliminate the state sales tax on groceries is due by Nov. 1, 2026.
"We're going to monitor the situation, work closely with the fiscal office and see what they say. We'll see how much of that revenue is coming back into the Education Trust Fund. We want to be cognizant of the fact that we're trying to do our best to protect education here in Alabama as we work to remove the tax on groceries," Jones said. "We're just going to be watching and seeing and our report I think by the end of this quadrennium will detail how we can move on with our next steps and hopefully tackle that next 2%."
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