Municipalities, occupational tax, phased out not to apply in police jurisidiction, new taxes prohibited, Sec. 11-51-91.1 added.
Impact
If enacted, SB44 would significantly impact municipal finance and local governance in Alabama. It prohibits municipalities from imposing any new occupational license taxes or increasing existing ones, thereby limiting local governments' ability to generate revenue from these taxes. The legislation is framed as a means to protect family incomes, particularly for individuals who may be vulnerable to economic fluctuations. However, this could also lead to funding gaps for municipalities that rely on these taxes for essential services.
Summary
SB44, titled the 'Family Income Protection Act,' seeks to phase out the occupational license tax levied by municipalities based on income derived from various occupations within their jurisdictions. The bill is designed to reduce the financial burden on individuals engaged in professions by establishing a systematic reduction in the occupational tax rate, eventually leading to its complete repeal. Specifically, the tax rate would be capped at the level in effect on January 1, 2021, and would subsequently decrease by a minimum of one-tenth of one percent each year until it reaches zero.
Contention
Debate surrounding SB44 centers on the balance between local revenue generation and taxpayer relief. Proponents argue that eliminating the occupational tax would support families and encourage workforce participation by reducing costs associated with conducting business in municipal areas. Conversely, opponents express concern that the bill undermines local control and hampers municipalities' ability to fund vital services. Critics fear that a complete phase-out of occupational taxes could lead to increased pressure on local budgets and other revenue sources to fill the resulting gaps.
Business taxes, requires annual reports from counties and municipalities, provides for causes of action, and revises the jurisdiction of the Alabama Tax Tribunal