Alabama House committee approves bill increasing state’s Internet sales tax
Rep. Chris England, D-Tuscaloosa, speaks during a special session on redistricting on Friday, July 21, 2023 in Montgomery, Alabama. (Stew Milne for Alabama Reflector)
An Alabama House committee Wednesday approved what amounts to an increase in the state’s Internet sales tax.
HB 258, sponsored by Rep. Chris England, D-Tuscaloosa, would add an additional charge to the simplified sellers use tax (SSUT), or online sales tax, which currently stands at 8%. The rate would be recalculated every five years, but a fiscal note from the Legislative Services Agency said the initial increase would be about 1.5%.
The additional levy would be distributed to school and county and municipal governments. It passed the House Ways and Means Education Committee on a 6-2 vote.
Supporters, including retailers, said the 8% rate for internet sales put brick-and-mortar stores at a disadvantage, since many operate in communities with higher combined sales taxes.
“As we discussed last week, it increases the SSUT tax to the state average,” England said on Wednesday
In a hearing last week, members of the education community wanted specific language directing money to schools. An amendment to the bill was added Wednesday that says that 20% would go to the State Department of Education to distribute to local boards on a prorated basis, based on the average daily membership of the preceding year.
England said there had been negotiations with the education community.
England’s bill is a companion to HB257, sponsored by Rep. Joe Lovvorn, R-Auburn, which creates a sales tax holiday for some outdoor equipment, which was also approved in the committee. Lovvorn’s bill was also amended to only be for one day.
Portions of the SSUT are already distributed to local governments. Rep. Troy Stubbs, R-Wetumpka, a former chairman of the Elmore County Commission, said they voluntarily give 25% of their share to the Elmore County Board of Education. He said the agreement has been beneficial to their relationships and ability to do projects.
“I would hope that those counties who are voluntarily participating will not view this as an out to get out of the agreement that they were already in,” he said.
The bill’s approval came as a part of a committee meeting that heard eight bills, but they did not vote on all of them. Chair Danny Garrett, R-Trussville, said at the start of the committee meeting that they were going to have to prioritize tax credits.
“We’re getting short on days, but we have time still to move good legislation,” he said. “So I just want to say, don’t feel pressured if we’re not comfortable– and I may not be comfortable with some of these– but I want you to speak your mind and all that. Just be mindful our responsibility to protect education.”
Rep. Debbie Wood, R-Valley, said that she often paused on bills with large fiscal notes, including England’s bill which originally has an estimate of $28 million. She said she worked with the chair to calculate the cost of six weeks of paid maternity leave for every educator in the state at $28 million.
“I know we’re giving a tax credit but we’re the education committee,” she said. “We could really do something to impact our teachers across the state, and we’re not even talking about that. We’re talking about allowing people to come in and purchase items that make them happy.”
The post Alabama House committee approves bill increasing state’s Internet sales tax appeared first on Alabama Reflector.
