A 2% decrease in grocery tax went into effect last November for the city of Clay. The council approved cutting its grocery tax in half despite inaction from the state legislature to cut the grocery tax statewide.
Clay city manager Ronnie Dixon told 1819 News then that the city wanted to help people through inflation and rising prices at the grocery store. However, despite public support from some state lawmakers, Dixon said just a couple of days after the council approved the cut, he was contacted and told it shouldn't be done.
"I was presented with an Attorney General's opinion from when Troy King was the attorney general," said Dixon. "It was several years old. So, when I talked to them, I told them I think I have a different opinion than the attorney general."
Dixon said State Rep. Danny Garrett (R-Trussville) and a representative from the Alabama Department of Revenue were the ones that contacted him with the AG opinion.
There have been two issues brought up when it comes to cities cutting their own grocery tax. One is items that are defined as groceries. For the city of Clay, groceries are items listed under the Supplemental Nutrition Assistance Program (SNAP).
"The city council is the one who put the sales tax in place," Dixon added. "I believe they have the authority to reduce it or wipe it out. I was told not on groceries because there was no definition of groceries. I told them that's why I used the SNAP program for the definition of groceries, and I never heard anything from them again. I believe it's just a matter of you've got to have the backbone to go ahead and do it."
The other issue for cities and the state is taking money from education. The city of Clay's sales tax does not go to schools, but the grocery tax in Alabama helps fund the state's Education Trust Fund, which currently has a record-breaking surplus.
"He [Garrett] asked me why we want to take money from schools," said Dixon. "I told him, 'I don't, but that money doesn't go to the schools.' So, we just had a difference of opinion on that."
Alabama Gov. Kay Ivey has proposed a tax rebate for citizens, and she said lawmakers should look at ways to provide even more relief. But so far, there is some discussion from House Minority Leader Anthony Daniels (D-Huntsville) that would give a month-long grocery tax holiday, possibly leading to a permanent adjustment. Another bill by State Rep. Chris England (D-Tuscaloosa) would allow local governments to repeal their own grocery taxes, something Dixon said was pointless.
"I never thought that whoever introduced a bill would be introducing a bill that would give cities an opportunity to reduce tax," Dixon explained. "What I thought they were going to do is removed the state sales tax. So, they have completely flipped on what the intent of most of the legislators that I talked to prior was, that they were going to take away the state sales tax on groceries. But this is two completely different things in my mind."
Dixon said he hopes lawmakers seriously consider cutting the grocery tax statewide instead of worrying about how cities handle their own taxes.
"I just don't think this is as hard as they're making it out to be," stated Dixon. "It's not for everybody, and I understand that. But to take the legislature down the road of passing an amendment that allows a city to do what they can already do is not what they have been discussing for a decade, which is removing the grocery tax."
Garrett has not yet responded to a media request on the matter. He previously told 1819 News that the grocery tax cut was something to consider statewide, but that money had to come from somewhere when looking at the overall picture. He said that while Alabama was one of only a few states that tax groceries, rates are much lower in other areas, such as property taxes.
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