Senate to consider replacing tax on food with higher income tax
Legislation that would eliminate the state sales tax on food and replace that revenue by eliminating the state income tax deduction for federal income taxes has passed the House of Representatives and the Senate Finance Taxation, Education Committee.
HB 274, sponsored by Rep. John Knight, D-Montgomery, would increase state income tax revenues by at least $345 million annually, but would reduce state sales tax on food by an estimated $320 million. The bill applies only to the 4 percent state sales tax, and would not eliminate the city and county sales taxes, which are usually 5-6 percent. Nor does it prohibit cities and counties from replacing the state sales tax, if removed, with higher local taxes.
If approved by the Legislature, the tax swap would go before voters in the form of a constitutional amendment Nov. 4. If the amendment passes, the state tax deduction for federal income taxes would be eliminated beginning with the 2009 tax year, as reflected on returns filed by April 15, 2010.
Alabama Farmers Federation policy states that, "We support the involvement of our organization in any tax-reform proposal to make sure that the farmers' best interests' are served."
Federation Governmental Affairs Director Paul Pinyan says that while cutting taxes on food sounds like a good idea, the organization is concerned Knight's bill disguises a net tax increase for most working families.
"While Rep. Knight says the bill would generate about $25 million in new revenue for the education budget, the Revenue Department's analysis shows eliminating the sales tax on food would cost $393 million, creating a $50 million hole in the budget," Pinyan said. "The governor's office also has released a fact sheet that shows more taxpayers would realize an overall increase in taxes than originally projected."
According to the fact sheet, more than 923,000 Alabama households would see their total tax burden increase. Taking into account the average sales tax savings on food, households with incomes as low as $70,000 a year would experience a net tax increase. Single tax filers, however, would be hit hardest. For them, the net tax increase kicks in at an income of $40,000 a year.
Opponents of the bill argue that eliminating the state deduction for federal income taxes constitutes a "double tax," with tax filers paying taxes on money they never see. Eliminating the deduction would effectively raise income taxes on families making as little as $50,000 a year. According to the governor's office, nearly 40 percent of Alabama tax filers and their families, or 1.4 million people, would be affected.
Alabama's poorest citizens already are eligible for tax-free groceries through the food stamp program. HB 274 awaits action in the full Senate where filibustering over a Macon County gambling bill has created a logjam for almost two months.
Meanwhile, the House of Representatives was deadlocked this week over a bill that would require certain out-of-state companies to pay state income taxes. HB 350, sponsored by Rep. Richard Lindsey, D-Centre, would raise an estimated $67 million in new corporate taxes for the education budget. House Republicans have withheld their support for the bill in an attempt to secure a portion of the new revenue to pay for a tax deduction for individuals and small businesses for health insurance costs.
Senate committee approves catfish labeling bill
The Senate Agriculture Conservation and Forestry Committee Thursday approved legislation that would require restaurants and other food establishments to provide country-of-origin labeling for catfish.
SB 399, sponsored by Sen. Bobby Singleton, D-Greensboro, would require restaurants to place country-of-origin information on the menu, placard or other written material. The companion bill, HB 576, sponsored by Rep. A.J. McCampbell, D-Linden, originally passed the House Agriculture and Forestry Committee last month, and a substitute passed the same committee Tuesday.
The substitute, approved by the ag committees in both chambers of the Legislature, is the result of discussions among the Alabama Farmers Federation, Alabama Restaurant Association and Alabama Retail Association.
Brian Hardin, director of agricultural legislation for the Federation, said the substitute protects the interests for catfish producers while providing additional guidance and assurances to food service establishments.
"The substitute bill, which was developed in conjunction with the Alabama Catfish Producers, provides restaurants specific guidelines on how the country-of-origin information is to be displayed," Hardin said. "In addition, it holds restaurants harmless for catfish they serve that was mislabeled by the wholesaler or processor, and it graduates the penalties for noncompliance over a two-year period."
Hardin thanked catfish producers for their efforts to meet with the Alabama Restaurant Association and work on a substitute to eliminate much of the opposition to the measure.
"Butch Wilson and David Pearce, on behalf of the Federation Catfish Committee, met with the sponsors and the restaurant association earlier in the session to discuss the goal of the legislation and the restaurant owners' concerns. That meeting laid the foundation that ultimately allowed the bill to move forward," Hardin said.
SB 399 will now go to the full Senate, and HB 576 is on the House calendar.
Hunting, fishing fines pass Senate committee
The Senate Agriculture, Conservation and Forestry Committee passed legislation Thursday that would update fines for hunting and fishing violations.
SB 592, sponsored by Sen. Kim Benefield, D-Woodland, and HB 677, sponsored by Rep. Thomas Jackson, D-Thomasville, would update fines and penalties, some of which have not been changed since 1940. The Senate Ag Committee passed both bills. HB 677 passed the full House earlier in the session.
Under the legislation, penalties would increase for hunting or fishing without a license, poaching, hunting in a closed season, hunting or fishing with prohibited devices or explosives and hunting protected animals.
The bill is supported by a coalition of agriculture, forestry and wildlife groups, including the Alabama Farmers Federation. It protects private property rights by discouraging poaching and trespassing.
House expected to take up immigration bills
The House of Representatives could consider a slate of immigration bills as early as next week.
Among the bills likely to be considered are those that would prohibit public benefits to illegal immigrants over the age of 18; impound vehicles of those without a license and proof of insurance; prohibit the transportation of illegal immigrants into the state; prohibit local governments from providing safe harbor for illegal immigrants; verify the citizenship of people arrested for driving under the influence (DUI); and revoke the licenses of businesses that employ illegal immigrants.
An agricultural and business coalition that includes the Alabama Farmers Federation opposes HB 664, sponsored by Rep. Randy Hinshaw, D-Meridianville. It would allow the state revenue commissioner to revoke, suspend or deny the renewal of the business license of an employer who knowingly employs an illegal immigrant.
Federal law already makes it a crime to knowingly employ illegal immigrants, and the Department of Homeland Security has recently ramped up enforcement of the law. Additionally, farmers and other related industries could be negatively affected if the businesses who purchase, process or use their products are penalized under the bill. Lawmakers and state officials also have stated that HB 664 would be extremely costly to implement and difficult to enforce.
Bills In Brief
HB 395 - Sponsored by Rep. Frank McDaniel, D-Albertville, was signed by the governor Tuesday. The Solid Waste Recyclable Materials Management Act imposes a statewide tipping fee of $1 a ton on solid waste disposal, which will fund the Alabama Department of Environmental Management's solid waste regulatory activities. Twenty-five percent of the funds collected will be used to cleanup illegal dumps on private land. AFF supports.
SB 191 - Sponsored by Sen. Myron Penn, D-Union Springs, is continuing to stall any action in the Senate. The bill would create the Macon County Racing Commission and give that body the authority to define and regulate electronic bingo gaming in the county. Alabama Farmers Federation policy states that the organization opposes gambling in any form.
SB 368 - Sponsored by Sen. Kim Benefield, D-Woodland, the Family Farm Preservation Act would prevent law-abiding farms from being declared a public nuisance. An amended version of the bill has passed the Senate Agriculture, Conservation and Forestry Committee and is on the Senate calendar. The amended version excludes pork production facilities. The Alabama Farmers Federation will work to restore language that will ensure all commodities are protected when the bill goes to the Senate floor.
HB 232 - Sponsored by Rep. Patricia Todd, D-Birmingham, would raise the sales/use tax on autos from 2 percent to 3 percent for vehicles that cost less than $40,000 and 4 percent for vehicles greater than $40,000. The bill has been assigned to the House Education Appropriations Committee. AFF opposes.
SB 607 - Sponsored by Sen. Lowell Barron, D-Fyffe, would require the State Board of Health to establish minimum standards of operation for home-based food processors. The bill was carried over Thursday by the Senate Health Committee. The State Health Department expressed concern about how to implement the bill. Supporters are seeking to provide a way for home-based processors to sell jams, jellies and other products at farmers markets. The companion bill, HB 888, is sponsored by Rep. Benjamin Lewis, R-Dothan, and has been assigned to the House Health Committee.
HB 186 & HB 187 - Sponsored by Rep. Paul DeMarco, R-Homewood, these bills would revise the corporations and banking articles of the constitution, respectively, using an article-by-article approach. Both bills have passed the full House and await action in the Senate. The Alabama Farmers Federation supports an article-by-article method of revising the constitution. AFF supports.
HB 308 - Sponsored by Rep. Demetrius Newton, D-Birmingham, calls for a referendum on a constitutional convention and would establish procedures to elect delegates. A convention could open the door for the elimination of current use, expansion of home rule and tax increases. The bill is expected to be considered by the full House next week. The companion bill, SB 243, sponsored by Sen. Ted Little, D-Auburn, has passed the Senate Judiciary Committee and is awaiting action in the full Senate. AFF opposes.
Please contact your House member and ask them to vote "no" on the budget isolation resolution (BIR) that would allow HB 308 to be voted on in the House.