Alabama House Bill HB132

Alabama 2023 Regular Session

• Introduced: 3/21/23
• Refer: 3/21/23
• Report Pass: 4/19/23
• Engrossed: 4/25/23
• Refer: 4/25/23
• Report Pass: 5/31/23

Caption

Relating to sales and use tax; to add a new Section 40-23-4.5, Code of Alabama 1975, to exclude products under Chapter 2A of Title 20 from the producer value added sales and use tax exemption.

Impact

Should HB132 pass, it will effectively alter current sales tax regulations concerning agricultural products within Alabama. By excluding certain processed agricultural products from the producer value added exemption, the bill aims to broaden the tax base for the state. This change could lead to increased revenue from sales and use taxes, with some implications for pricing and market access for producers. Local farmers and agricultural businesses may need to adjust their pricing strategies to account for the additional tax burden that comes with this change.

Summary

House Bill 132 seeks to amend the tax exemption status of certain agricultural products in the state of Alabama. Specifically, the bill clarifies that products processed or produced under Chapter 2A of Title 20 will no longer be eligible for the producer value added agricultural product exemption that was previously established. This amendment is intended to target specific agricultural processes and ensures that sales and use tax is applied to these products, which were previously exempt under state law. Proponents argue that the change is necessary to ensure fair tax treatment and to streamline agricultural regulations.

Contention

The adjustment of tax exemptions as represented in HB132 may lead to potential contention among stakeholders in the agricultural community. Some producers may view this change as a disadvantage, arguing it puts their products at a competitive disadvantage compared to those that remain exempt. Advocacy groups for farmers may raise concerns over the additional financial strain it could impose, especially on small agribusinesses that rely on these exemptions for operational viability. It remains to be seen how these stakeholders will respond and whether amendments will be proposed to alleviate such concerns.