Senate sends bill requiring legislative action for city occupational taxes to the governor

A local law adopted by the Alabama Legislature would be necessary before a city could impose an occupational tax under legislation awaiting Gov. Kay Ivey’s signature.

Thursday, Feb. 27, the Alabama Senate voted 27-7 for HB147 by Rep. Chris Sells, R-Greenville, which the House passed Feb. 11 on a 74-27 vote. The bill would not affect 26 occupational taxes in effect before Feb. 1 of this year.

If the governor signs the bill into law, it will effectively block a 1% occupational tax on anyone working within the Montgomery city limits and could lead to a legal challenge from that city. The Montgomery City Council approved its occupational tax ordinance Feb. 18 with an effective date of Jan. 1, 2021.

Sells said he represents 3,000 constituents in Montgomery County. “I don’t want them to pay a tax for working,” he said. Sells refers to occupational taxes as “taxation without representation,” while opponents say his bill denies cities an avenue to raise revenue. Mayors of 10 Alabama cities signed a letter opposing HB147.

Similar legislation received Senate approval last year, but not enough House members voted to consider it before the state’s budgets.

Originally posted 3 p.m. Feb. 27, 2020.

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