Alabama residents felt some relief from the check-out line on Friday, when the first tax reduction on food items took the market.
Governor Kay Ivey signed a bill in July which will eventually lower the sales tax for state-owned food items by 2 percent from a rate of 4 percent. In the initial phase the cut which is one percent reduction was made official on Friday September. 1st, putting the tax on food items at 3 percent.
The next phase of the tax cut is scheduled for September. 1st, 2024, the grocery tax will be reduced by another 1 percent, to an overall rate 2.5. The cut will be dependent on the projections of education revenue that show at least 3.5 percent or more growth in the fiscal year 2025. If the projected revenue for education don’t meet that increase this cut may be delayed until the following year.
Based on the Alabama Retail Association, cutting the tax on groceries by half could save Alabamans around $318million. Alabama Arise, a nonprofit that has worked to reduce tax on sales at the grocery store estimates that the one-percent cut in sales tax at the grocery store will cost a family of four approximately $150 per year.
Alabama is one of the three states that tax food items at a full rate and South Dakota and Mississippi being the two others. Alabama is also among 13 states that impose the same amount of tax for food items.
In Andalusia the taxes on groceries will be cut to 9 percent over the next year, in advance next year’s state’s cut of 1 percent. The state will be charged 3 percent, while the city will charge 3.5 percent while the county is charged 2.5 percent. A quarter-percent of the sales tax collected by Andalusia is allocated to education. The county allocates around 65 percent of its revenue from their sales tax for schools that is distributed among all schools within the county, which includes the city-based school systems located in Andalusia along with Opp.
There were some issues implementation of the tax reforms at the very least, some Walmart stores in the state early on Friday morning. computers were imposing an additional tax of 9 percent instead of reducing the tax from 10 percent to 9 percent. Store managers announced that they were working on resolving the problem and announced that refunds would be given to customers who were charged too much. Walmart customers in Kansas were faced with the same problem in the past year, when that state cut its tax on food sales.
An official statement by Walmart said “Earlier this morning, some Walmart customers as well as Sam’s Club members across Alabama were overcharged for sales tax for shopping with us. Beginning on Sept. 1st the rate of sales tax for food items decreased by one percentage point across the state. Our systems incorrectly charged the old rate as well as this new one at point of purchase. This is now being rectified and we’re requesting affected customers to take the receipts to local clubs or stores for reimbursement of the more expensive tax on sales.”
The state’s tax on grocery sales cut is based on an Federal Supplemental Nutrition Assistance Program’s listing for applicable food items, which includes the majority of items sold at grocery stores which includes meats, vegetables dairy products snacks, and non-alcoholic drinks. Other products, including tobacco, alcohol and pet food, as well as household cleaners and hygiene products are still taxed at 4 percent.
The article Initial phase of state’s reduction in grocery sales tax currently in effect appeared in The Andalusia Star-News.
