Alabama Senate Bill SB65

Alabama 2023 Regular Session

• Introduced: 3/7/23
• Refer: 3/7/23
• Report Pass: 3/21/23

Caption

Relating to municipal occupational license taxes; to add Section 11-51-91.1 to the Code of Alabama 1975, to reduce any municipal occupational license tax greater than one percent based on an annual reduction in the tax until the tax would be one percent; to provide that any occupational license tax levied by any municipality would not apply to any person performing an occupation in the police jurisdiction of the municipality or on any property annexed into the municipality after January 1, 2023; to provide for a referendum under certain conditions in certain counties in which two or more municipalities levied an occupational tax greater than one percent on January 1, 2023; to prohibit a municipality from levying a new occupational license tax or increasing the rate of any existing municipal occupational license tax; to provide for certain exceptions from any occupational taxes for certain temporary workers and for severance pay; to specify the power of a municipality pursuant to Section 11-51-90 of the Code of Alabama 1975, to license an exhibition, trade, business, vocation, occupation, or profession only within the corporate limits and jurisdiction of the municipality, to further provide for refunds and collections of the license fees and taxes, and to provide that these provisions are retroactive and declaratory of existing law.

Impact

The legislation is designed to alleviate the financial burden of municipal occupational license taxes for businesses and individuals. By instituting a cap on these taxes, SB65 aims to make Alabama a more attractive environment for both current and prospective business owners. The bill also addresses the ability of municipalities to levy new occupational taxes or to increase existing ones, prohibiting such actions to ensure compliance with the new framework. This potential for tax reduction is anticipated to encourage entrepreneurship and stimulate local economies.

Summary

Senate Bill 65 (SB65) aims to reform municipal occupational license taxes within Alabama. The bill introduces a new section to the Code of Alabama 1975, establishing a framework that mandates a reduction of any municipal occupational license tax exceeding one percent. This reduction would occur annually until the tax reaches the one percent threshold. Additionally, SB65 stipulates that any occupational tax imposed by municipalities will not apply to individuals operating within the police jurisdiction of the municipality or on properties annexed into the municipality after January 1, 2023.

Contention

Debate surrounding SB65 centers on the balance between municipal control and state-level regulations. Proponents argue that the bill will provide much-needed relief to businesses by standardizing and limiting occupational taxes, thereby promoting economic development. Critics, however, fear that the bill undermines the authority of local governments to manage their own financial policies, particularly in communities that rely on these taxes for essential services. This contention highlights the ongoing struggle between local autonomy and state oversight in the realm of municipal finance.