Alabama 2023 Regular Session

Alabama House Bill HB396

Introduced

4/27/23

Refer

4/27/23

Caption

To amend Sections 40-23-1 and 40-23-4, as last amended by Act 2022-291, Act 2022-293, Act 2022-373, and Act 2022-199, 2022 Regular Session, Code of Alabama 1975, related to sales taxes; to define food and exempt sales of food from state sales and use taxes; to establish the local sales tax rate on food for purposes of county and municipal sales and use taxes as the existing general or retail local sales tax rate; and to allow a local governing body to reduce the local sales tax rate or exempt food from local sales and use taxes.

Impact

Should HB396 pass, it will significantly influence state revenue from sales tax, particularly from food, as it eliminates the state sales tax on food purchases. Additionally, the bill sets the local sales tax rate on food at existing rates, but allows local governments the authority to adjust these rates or opt for an exemption. Local governing bodies will have the discretion to either maintain the current tax structure or provide further tax relief to consumers by adjusting local food tax rates.

Summary

House Bill 396 proposes to amend Alabama's sales tax laws by defining 'food' and exempting food sales from state sales and use taxes starting September 1, 2024. This bill aims to clarify what constitutes food under state law, aligning with federal definitions used in the Supplemental Nutrition Assistance Program (SNAP). The exemption is intended to alleviate some tax burdens on consumers while promoting affordability and access to food across the state.

Contention

Opposition to the bill may arise from concerns regarding the financial implications for state and local revenue, particularly in areas reliant on sales taxes for funding public services. Critics might argue that losing sales tax from food could lead to budget shortfalls, negatively impacting essential services, while supporters contend that the bill would ultimately support low-income residents and boost local economies by increasing food affordability. Overall, discussions around HB396 are likely to focus on balancing the economic benefits of the proposed tax exemption against the potential risks to state and local revenues.

Latest HB396 Activity

Companion Bills

No companion bills found.

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