Montgomery Advertiser: Rally calls for end to state tax on groceries
media mentionby Brian Lynn
March 15, 2012
Speakers at a State House rally Thursday said repealing the state’s sales tax on groceries and a federal income tax deduction would create tax equity and address looming budget shortfalls.
“Asking the richest Alabamians to pay the same share as the rest of us is common sense,” said Kimble Forrister, state coordinator of Alabama Arise, a coalition of churches and religious groups that works on economic justice issues. “We cannot cut our way to a better Alabama.”
Alabama and Mississippi are the only two states in the nation that assess a state sales tax on groceries without any aid or offsets for low- and middle-income households. In Alabama, groceries fall under the state’s four percent sales tax rate. Added to the city’s taxes, Montgomery charges a total of 10 percent on groceries.
Those taxes also tend to augment tax inequality among citizens. According to the Institute on Taxation and Economic Policy, the top one percent of Alabama taxpayers – those making $384,000 a year or more – paid an average of four percent of their income in state and local taxes in 2007. The bottom 20 percent – those making $16,000 or less annually – paid a tax rate of 10.2 percent.
Attendees of the rally, which drew about 30 people, support legislation brought by Rep. John Knight, D-Montgomery, that would repeal the sales tax on groceries, replacing the lost revenue by repealing Amendment 225, passed in 1965, which allows taxpayers to deduct federal income tax from their state income taxes. The deduction tends to benefit the wealthiest Alabamians.
The Legislative Fiscal Office has not analyzed this year’s version of bill, which has failed to gain traction in previous legislative sessions. However, Kirk Fulford, an analyst with the LFO, said a Department of Revenue model showed Knight’s legislation bringing about $485 million in tax revenue, while costing about $326 million, a net gain of $159 million.
Speakers said the unequal payment of taxes led to funding shortfalls in needed services; lawmakers have said revenue shortfalls could lead to cuts of 25 percent or more in agencies like Alabama Medicaid and the Department of Mental Health. Tom Duley, president of the Arise Citizens’ Policy Project’s board of directors, called budgets “moral documents” that could shape Alabama for better or worse.
“Hard decisions require courageous leadership,” he said. “It is not courageous to close mental health facilities . . . the hard decision is to lower taxes like grocery taxes for those who pay too much, and raise them for those who pay too little.”
Republicans in previous years have opposed Knight’s proposal, saying they did not want to see taxes raised on one group and lowered for another. Sen. Gerald Dial, R-Lineville, has introduced legislation that would phase out the state sales tax on groceries by 2015 while raising the overall state sales tax from four to five percent. Forrister said at the rally that he appreciated Dial’s efforts, but opposed “replacing one regressive tax with another regressive tax.”
The rally included members of Occupy Mobile, who recently concluded a 12-day walk to Montgomery to urge the repeal of the tax. Members of the group wore T-shirts at the rally with “Occupy Mobile” on the front and “Take the Tax Off Food” on the back. Julie Andrianopoulos, a member of Occupy Mobile, said the members reversed that on the walk and got a “positive response” from those they met on the walk.
“A lot of people in Alabama aren’t aware we’re one of only two states that do that,” she said.