The Senate Finance and Taxation Education Committee on Wednesday amended and approved SB62 by Sen. Arthur Orr, R-Decatur, which would exempt baby bottles, formula and wipes, breast pumps and related products, diapers, maternity clothing and menstrual hygiene products for personal use from state sales and use taxes. The exemption wouldn’t apply to city and county taxes.
Orr’s original bill would have also required local governments to make the items tax-exempt, which legislative fiscal experts estimated would lower annual receipts by $15.2 million for all of the state’s cities and counties. Orr called the bill a “low-cost way” “to support families with small children, life” and women on purchases “that are not optional.” Eleven of the 15 members of the committee sided with local governments’ right to make their own taxing decisions. The full committee voted for the bill in its amended form. It awaits consideration by the full Senate.
Senate panel carries over bill to exclude excise taxes from gross receipts’ business licenses
On Feb. 7, the Senate County and Municipal Government Committee carried over legislation allowing businesses that pay municipal business licenses based on gross receipts to deduct excise taxes paid to federal, state and local governments from those receipts. Businesses generally pay excise taxes, which are included in the price of a product or a service, on fuel, tobacco and alcohol.
In a public hearing, the Petroleum & Convenience Marketers of Alabama spoke in favor of SB38 by Sen. Gerald Allen, R-Cottondale. The group argues that gas and diesel fuel taxes are included in the price at the pump and to consider the excise taxes gas stations and convenience stores pay to local governments as part of gross receipts for the purpose of determining a business license fee is double taxation. A typical gas station remits $50,000 monthly to local governments in fuel excise taxes, the group’s spokesman said.
In the 2023 session, Allen proposed a similar bill that was amended to only apply to motor fuel excise taxes. That bill made it through the full Senate and a House committee, only to die without House action on the session’s final day.
Sen. Chris Elliott, R-Josephine, the committee’s chairman, asked that the Alabama Revenue Department come back with a fiscal note that reflects what the loss in revenue would be if all excises taxes were excluded from gross receipts business licenses. A representative of the city of Mobile estimated such an exclusion would mean a $5 million loss of revenue for that city.
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