MONTGOMERY — Gov. Robert Bentley wants to get rid of Alabama's sales tax on groceries, he said Tuesday — and he doesn't want to raise another tax to replace the lost revenue.
"I have no plans to replace it with another tax," Bentley said.
In a press conference at the Capitol Tuesday, Bentley signed an executive order creating an 11-member task force to study the idea of lifting the sales tax from groceries. He said he expected the group to report back with a plan to remove the tax by June.
Alabama is perhaps the only state that still charges full sales tax on food items. Advocates for the poor have long criticized the tax as placing an undue burden on poor people. The state charges a 4-cent sales tax, but with county and local taxes added to it, many Alabamians pay 9 or 10 cents in tax on every dollar they spend at the grocery store.
That cost has raised criticism on both sides of the political aisle.
Bentley on grocery sales tax task force. pic.twitter.com/818bYPxmsb— Tim Lockette (@TLockette_Star) February 21, 2017
"This is not a liberal issue. It's not a conservative issue," said Rep. Matt Fridy, R-Montevallo, who spoke at Bentley's press conference. "It's a good government issue."
Still, critics of the grocery tax have always faced the same problem: sales tax is earmarked for schools. State officials say taxes on food now generate more than $300 million per year. Past proposals to replace the grocery sales tax with other revenue — by raising sales taxes on other items, for instance — have always died in the Legislature.
Supporters of Bentley's plan said Tuesday that there's no need to raise a new tax. The money saved on groceries, they said, would ultimately go back into the economy and be taxed anyway.
"These people will spend the money again, so it's not like it will come out of the Education Trust Fund," said Rep. John Knight, D-Montgomery, a longtime opponent of the sales tax on groceries.
Rep. John Knight: Eliminating tax on groceries "not that much of a tax risk." pic.twitter.com/WJsFPTSk9y— Tim Lockette (@TLockette_Star) February 21, 2017
"It may not actually be lost revenue, it may be diverted revenue," said Revenue Commissioner Julie Magee. She said Bentley's panel would study the effects of a tax decrease to see if the state recouped the money from other taxes.
"Under no circumstance would we get every dollar back," said Susan Kennedy, director of government relations for the Alabama Education Association, the state's professional organization for teachers.
Kennedy said the AEA would support the sales tax cut if the state would make up the lost revenue by closing corporate loopholes and tax exemptions. A January report by the Legislative Fiscal Office found that the state offers roughly $4 billion per year in tax exemptions, including roughly $1 billion in exemptions on sales taxes on everything from mining machinery to farm products.
Bentley's proposal would end only the 4 percent state sales tax on groceries, leaving in place local and county taxes.
The governor has yet to appoint members to the sales tax task force. To pass this year, a bill to change sales tax would have to be ready by late May, when the Legislature adjourns.