The House version of a long-awaited grocery tax reduction was approved in committee Wednesday.
The bill, sponsored by Ways and Means Education Chair Rep. Danny Garrett, could be on the floor as soon as Thursday and moved through the Senate next week.
Following suit with Lt. Gov. Will Ainsworth’s proposal to reduce or eliminate the tax, supported by the entire Senate, Garrett’s house proposal would gradually reduce the grocery tax, with a cut from 4% to 3% this year. If Education Trust Fund revenue grows by at least 2% annually, the tax will be further reduced to 2% in 2025.
“With the fiscal office, we’ve taken the current scenario we have with our funding, we’ve looked at the projected revenue, the budget, the spending, the reserves, and we factored in a mild recession,” Garrett (R-Trussville) said. “And we believe that we are confident that we can handle this proposal.”
The tax cut applies specifically to food covered under the federal Supplemental Nutrition Assistance Program (SNAP). A projected annual loss of $318 million to the ETF is expected when the tax is fully implemented at 2%.
Alabama has a state sales tax of 4% and some local jurisdictions impose additional sales tax of up to 7%, making the total sales tax rate in certain parts of Alabama as high as 11%.
Alabama is one of only 13 states imposing a tax on groceries, and one of only three taxing them in full.
“It’s clear that constituents really want to see reduction in grocery taxes, that’s important,” Garrett said in a recent interview with Yellowhammer News. “That’s what people want and we represent the people.”
There are five legislative days left on the calendar. Passage of this bill would require at least three.
Grayson Everett is a staff writer for Yellowhammer News. You can follow him on Twitter @Grayson270 for coverage of the 2023 legislative session.
