A Republican lawmaker is proposing a gradual removal of the state sales tax on food, paid for by an increase in the overall sales tax rate.
The proposal, sponsored by Sen. Gerald Dial, R-Lineville, would reduce the four percent state sales tax on food by a percentage point a year, starting in 2012, before eliminating it entirely in 2015.
As the sales tax on food dwindled, the sales tax on other items would be increased by a quarter of a percentage point a year, until it reached five percent in 2015.
Dial said at a press conference Tuesday morning the proposal was “revenue neutral” and would not cost the Education Trust Fund any money. The senator, who represents a rural district in eastern Alabama, compared the proposal to legislation passed in the late 70s removing state sales taxes from prescription drugs.
“It’s wrong for the whole of the state,” Dial said. “The wrong thing is to tax necessities. You shouldn’t tax prescription drugs, which are a necessity, and you shouldn’t tax food, which is a necessity.”
Proposals to remove the sales tax from groceries have been common in the Legislature in recent years, but have generally failed to move. Rep. John Knight, D-Montgomery, has brought forward several proposals that would remove the sales tax on food and pay for it by allowing voters to decide whether to repeal an amendment allowing taxpayers to deduct federal income tax paid from their state taxes.
The GOP has criticized the Knight approach, arguing it would be a tax increase. In 2009, Republicans proposed an income tax rebate for families below the poverty line to make up for sales taxes paid on groceries. Democrats said at the time the proposal did nothing for those families, who already qualified for food stamps.
State shoppers pay an average combined sales tax of 8.64 percent. An average family that spent $80 a week on groceries would save about $3.20 a week without the state sales tax, and about $166.40 a year.
Dial has drafted a bill that he said has not been filed. A press release announcing the legislation said Rep. Duwayne Bridges, R-Valley, was a co-sponsor of the legislation; however, Bridges, who sponsored the 2009 GOP proposal, said Tuesday that he had spoken with Dial about the proposal and did not support it.
“I was in agreement with him that something needs to be done,” he said. “However, after reviewing the bill, I see it would essentially be a tax increase.”
Dial argued at his press conference that businesses would benefit from consumers having more cash in their pocket. Dial cited an example of a $50 Thanksgiving dinner that would cost $2 less in taxes under his proposal. “The $2 I save on Thanksgiving dinner will be spent on Friday, on something other than food,” he said.
– posted by Brian Lyman