Senate panel OKs bill to remove tax on groceries

MONTGOMERY, Ala. (AP) — Legislation to remove the state sales tax on groceries could be doomed if the support doesn’t expand beyond the party line vote it received Wednesday in a state Senate committee.

Nine Democrats voted for the bill in the Senate Finance and Taxation-Education Committee, and three Republicans voted against it. The 9-3 vote sends the measure to the Senate for consideration.

But the leader of a lobbying group for Alabama’s poor said there aren’t enough Democrats in the Senate to pass the legislation, adding that it needs bipartisan support.

A similar bill won approval in the House last year but fell one vote short of passage in the Senate. The support last year split largely along party lines, but three Democrat senators who supported it last year are no longer in the Senate. One died, one was elected to Congress, and one was convicted.

Kimble Forrister, executive director of Alabama Arise, said proponents have made changes in the bill in the hopes of gaining some GOP support.

The legislation, sponsored by Sen. Hank Sanders, D-Selma, is a proposed constitutional amendment that would erase the state’s 4 percent sales tax on groceries. It would not affect city and county sales taxes on food, which can run as high as 6 percent combined.

To pay for the $364 million-a-year tax break, the bill would stop the wealthiest Alabamians from receiving a state income tax deduction for federal income taxes paid. That would generate $380 million.

Currently, everyone gets the income tax deduction. Sanders’ bill would allow individuals making less than $100,000 annually and couples making less than $200,000 to keep the deduction. For individuals making between $100,000 and $200,000, the deduction would gradually phase out. The same thing would occur for couples making between $200,000 and $400,000. Individuals making more than $200,000 and couples making more than $400,000 would get no deduction.

Last year’s bill, which died, would have eliminated the deduction for everyone, but it also would have raised the income level where Alabamians start paying income tax. That is not a part of Sanders’ legislation this year.

An opponent, Sen. Larry Dixon, R-Montgomery, said the bill represents a major tax increase for some of his constituents.

“Somebody is going to end up with a $380 million tax increase. There is no way around that,“ he said.

Sen. Larry Means, D-Attalla, said only the wealthiest Alabamians would pay more in income taxes than they save on groceries.

“Both people in my district who are not going to have a federal income tax deduction are just going to have to get mad,“ Means said.

A bill similar to Sanders’, sponsored by Rep. John Knight, D-Montgomery, won approval last week from a House committee. Knight’s bill is pending in the House.

Sanders’ bill said he will tinker with his bill to make it revenue neutral before seeking a vote in the Senate.

If either bill passes the Legislature, it can’t take effect unless approved by Alabama voters in a statewide referendum in 2010.