Lawmaker tables bill to eliminate Alabama revenue, sales tax, and replace it with consumption tax

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A Republican in Alabama wants the state to scrap its income and sales taxes and replace them with a tax based on what people use.

State Representative Mike Holmes, R-Wetumpka, has once again pre-tabled legislation to replace Alabama’s current system with one based on the consumption of new products and services.

“For too long, Alabamians have been burdened with a tax system that chooses winners and losers from an endless maze of tax exemptions, deductions and credits,” Holmes said. “A fair system treats everyone the same by taxing them the same rate when buying new goods or purchasing services. “

Holmes’ Alabama Economic Freedom Act would repeal current state income and state, county and municipal sales taxes and replace them with an 8.03% tax rate on every new purchase. products and services. The tax would be collected by traders at the point of sale. Exports and the purchase of goods by companies would not be taxed, as would used goods or spending on savings, investment or education.

More than 35 percent of Alabama’s tax revenue comes from personal income tax and 26 percent from general sales tax. Selective sales taxes on things like alcohol, cigarettes, and gasoline generate about 25 percent. The property tax is less than 3.5 percent.

Holmes’ bill would also provide a monthly rebate to “legal citizens of Alabama” to offset the expense tax, Homes said, based on family size and expenses. (What would my discount be? You can see it here.)

If passed, the change would take effect on January 1, 2021.

The bill is based on the Congressional Fair Tax Act of 2019.


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