Removal of Food taxes, is it really a personal savings or a boom to Montgomery?
Once again Senator Dial is attempting to fatten state coffers at the expense of all citizens, in particular the less fortunate. Remember the less fortunate must also purchase birthday, wedding, and Christmas gifts along with school supplies, a lawnmower and gasoline for fear of some weed ordinance and subsequent fine.
Last session it was his SB279 and in the 2014 session as the sole sponsor he tried again with SB287. On the surface he will remove STATE (not county or municipality tax) on food but hit everyone with an increase in state sales and use tax.
Alabama is the last of a couple states with this regressive food tax and needs to be removed but not with his plan.
ARISE who has for nearly 20 years been fighting to have the tax removed from food items. And so is Mr. Douglas French, then Mises Institute President, who penned an informative and thought provoking editorial piece during the 2012 legislative session opposing the similar effort, which evidently failed.
If it sounds so great to remove tax on food, then why the opposition?
Watching both hands, in particular the one behind the back with crossed fingers, and upon closer scrutiny the bill is more regressive and will fatten our government coffers at the expense of citizens. When government grows citizens lose their hard earned money; history proves this. My good friend John Sophocleus, author, Constitutionalist, and a member of the AU Economics Department, emailed me with his thoughts that lower grocery prices will not come about with the removal of tax on food. He writes, "What sort of moron really thinks if producers can remove the 4% State sales tax on food - which they mostly bear -- they'll actually lower prices to consumers that portion once no longer compelled to send it to Montgomery. Once I write the column pointing out that folk's grocery bill only went down .5% instead of 4% as promised - it will be too late and everyone (esp. the poor) will be suffering the 25% increase from 4 cents to 5 cents on every dollar..."
ARISE wrote because of the incremental decrease in tax on food and smaller planned increase in the general sales and use tax the products we purchase daily will simply shift our every day "sales tax from one aisle to the other ... to a host of non-food necessities, including clothes, toiletries, school supplies and over-the-counter medicines." Eventually, on September 1, 2016 SB287 had it passed would have removed all state food taxes while requiring a five percent sales tax on the majority of items we purchase. Let us remember that $200 bicycle for the grandchild, that $300 low end power lawn mower, a $80 car tire, taking a day trip to the local water park, or simply purchasing a hot dog, fries, and drink while supporting your favorite local high school sports team. You will also be paying more in excise tax for rental storage space under the pretense of eliminating food tax - few items purchased or used by common man will be exempt.
French did the math and broke it down into an every day statement we can all understand. He wrote that Americans now spend less than 10 percent of their incomes on food. Therefore, he concludes “ultimately citizens would pay 1 percent more on 90 percent of their purchases, while being relieved of the 4 percent tax on food, which is less than 10 percent of their purchases.”
One important factor that has been neglected from this discussion is that shifting the food tax to non-food items will effect every day shopping. Currently, purchases made with a food stamp card are tax exempt and therefore a revenue loss to the state until such an effort as Dial's is made law.
This bill will ensure everyone including those with a food stamp card will pay a higher sales and use taxes. This bill is not solely about the removal of food tax; watch both hands. "The Legislature recognizes the effect on-line purchases has had on tax collections due to the inaction by the federal government to act on pending legislation allowing for the collection on on-line sales... [and] would have a positive impact on state tax collections on general merchandise" reads a portion of the bill and proves the intent is far from removal of tax on food.
The importance of food in this bill is evident with the definition of food being on page 13 of the bill's 13 and half pages.
Think for a second where else you may spend your precious hard earned money knowing it'll cost you an extra 1 percent within a few years. Will we all see an additional 1 percent increase in gasoline? We will see an increase in sales and use tax including, as quoted from the bill...
"places of amusement or entertainment, billiard and pool rooms, bowling alleys, amusement devices, musical devices, theaters, opera houses, moving picture shows, vaudevilles, amusement parks, athletic contests, including wrestling matches, prize fights, boxing and wrestling exhibitions, football and baseball games, (including athletic contests, conducted by or under the auspices of any educational institution within this state, or any athletic association thereof, or other association whether the institution or association be a denominational, a state, or county, or a municipal institution, or association or a state, county, or city school, or other institution, association or school), skating rinks, race tracks, golf courses, or any other place at which any exhibition, display, amusement, or entertainment is offered to the public or place or places where an admission fee is charged, including public bathing places, public dance halls of every kind and description within the State of Alabama."
You, your neighbors, and friends across Alabama must contact your senators and advise them to reject this effort in this context from ever passing in 2015 or later. You can contact your state senator and representative using these links to stop this bill in its tracks.