House panel votes to remove sales tax from food

Published 3:25 pm Thursday, February 5, 2009

MONTGOMERY — A proposal to remove the state’s 4 percent tax on the purchase of groceries passed the first hurdle in the Alabama Legislature on Thursday.

The bill by Rep. John Knight, D-Montgomery, was approved on a voice vote with several members expressing opposition. The bill now goes to the full House for debate.

A bill to remove the tax from grocery purchases passed the House last year, but was defeated in the Senate.

The bill is a constitutional amendment and would have to be approved by Alabama voters if it passes the Legislature.

The measure would replace the lost revenue from the sales tax by removing the deduction for federal income taxes paid from some higher income taxpayers. That’s a change from last year’s bill that would have removed the federal income tax deduction for all taxpayers.

The bill that passed the committee Thursday would allow single taxpayers making below $50,000 a year and married couples making less than $100,000 to continue to deduct all of their federal taxes. The deduction would be phased out for those earning more, and it would be eliminated altogether for single taxpayers making more than $200,000 and married couples making more than $400,000.

Last year’s bill was opposed by most Republican lawmakers, who complained that removing the deduction would mean a tax hike for many middle- and high-income taxpayers.

Knight, a longtime proponent of the measure, told committee members that Alabama and Mississippi are the only states that continue to levy the full state sales tax on groceries. He said he sees his bill as an economic stimulus, similar those being debated in Congress.

“I think the best stimulus is to give the people a tax break on what they spend on groceries,” Knight said.

An advocate for low-income Alabama residents told committee members the sales tax on groceries was a burden on the working poor.

“This will be a stimulus. When we put money in the hands of people who are struggling to get by, they are going to spend it,” said Kimble Forrister, executive director of Alabama Arise, a Montgomery-based organization representing the state’s poor.

Casting a loud “no” vote was Rep. Jeremy Oden, R-Eva, who said he opposes removing the federal income tax deduction from higher income taxpayers. He said he was also worried that removing the state sales tax on groceries might encourage cities and counties to raise their sale taxes.