Camping and hunting equipment, boats and boating equipment and other outdoor supplies would be exempt from state sales tax two weekends per year under Parliamentary Bill 257sponsored by Rep. Joe Lovvorn, R-Auburn.
The bill creates an “Alabama Adventure Awaits” sales tax exemption, similar to the Back to School tax exemption.
It's one of several bills currently pending in the Legislature aimed at reducing sales tax on certain items, or exempting them all together. The amount and size of the advances will be weighed against the reduction in state revenue.
Lovvorn told the Alabama Daily News that the proposed new tax holiday came in part from the findings of Innovate in Alabamaa public-private partnership to support entrepreneurs and state development.
“When we looked at why people wanted to come to Alabama and stay, the No. 1 thing that kept coming back to us was the great recreational opportunities we have here,” Lovvorn said. “…I just started thinking about ways we could look at getting people outside. »
Untaxed items would include boats and ATVs, boating and water activity supplies, camping supplies, sports or recreational equipment, fishing supplies, general outdoor supplies, firearms and ammunition, gun safes and hunting supplies.
Lovvorn said the tax exemption could incentivize people to use national parks and be used by retailers to plan events such as boat shows and fishing and hunting exhibitions.
“We're trying to light a spark so that more people want to be outside,” Lovvorn, chairman of the House Rules Committee.
Local municipalities would have the option to waive their sales taxes on items the first weekends of March and August each year. The vacation would end in 2027 unless extended by Parliament.
The bill has been assigned to the House Ways and Means Education Budget Committee and does not yet have a fiscal note.
“I hope this will generate more revenue for the state,” Lovvorn said. “If people buy a tent this weekend, they will need lanterns next weekend. And if they buy a boat, God knows they'll buy something else.
Stable ETF income prompts caution
Lovvorn's is one of several bills this session affecting the collection of sales taxes on specific items.
House Bill 51, introduced by Rep. Margie Wilcox, R-Mobile, would eliminate the state tax on hearing aids. Its tax impact is approximately $3.1 million per year. It passed the House last week, but not before being amended to clarify that county and city governments are not required to exempt their local taxes.
House Bill 282, from Rep. Mark Shirey, R-Mobile, would exempt glasses and contact lenses. There is no tax note yet.
Sen. Jack Williams, R-Wilmer, has Senate Bill 6 to eliminate the state sales tax on livestock fencing materials and Sen. Josh Carnley, R-Ino, has the bill Senate Bill 94 to eliminate state sales tax on the sale of bees and their products. . Neither has a tax bill yet.
A proposal from Sen. Arthur Orr, R-Decatur, and Neil Rafferty, D-Birmingham, to eliminate the state sales tax on feminine hygiene and several baby care items such as diapers and wipes, is currently being considered in the Legislative Assembly. That would remove about $11.2 million from state revenue each year.
Meanwhile, major tax credit legislation related to workforce development and participation is expected in the second half of the legislative session. This too, at least initially, would result in a drop in state revenue.
And a proposal to cap property tax increases from year to year would have an impact of about $58 million on state, local and school revenues. This proposal from Rep. Philip Pettus, R-Killen, was approved in a House committee last week.
In the coming weeks, lawmakers will have to weigh the proposed cuts and credits against an education trust fund with already stable revenues. Income and sales taxes are the ETF's primary sources of income. As of February, five months into the fiscal year, income tax revenues were up 0.24% and sales tax revenues were down 3.04%, or nearly 30 million dollars. Overall, inflows into the ETF increased slightly in February, but remain down 0.45% year-over-year.
At least part of the decline in sales tax revenue is attributable to last fall's 1% reduction in the state sales tax on most groceries.
Stable revenues were expected, Orr, chairman of the Senate Education Budget Committee, said recently. But they urge caution.
“When it comes to tax exemptions, reductions and incentives, we need to be very careful going forward,” Orr said.
General Fund revenue increased 34% in February, but Kirk Fulford, deputy director of the Legislative Services Agency, said that was due to some movement over the past year in opioid settlement funds.
“The $30.7 million growth (in February) is misleading,” he said. “…Fortunately, this timing issue is now resolved and will not impact growth going forward. »
Overall, the general fund is up about 12%.
“Ad valorem (property) taxes and insurance premium taxes have both shown substantial growth due to inflationary impacts on home and other property values,” Fulford said. “Interest on state deposits continues to grow, but at a slower pace than last year due to spent/transferred fund balances. The Atlanta Federal Reserve now projects only a 10% chance of an interest rate cut in March.
“…The timing of any reductions this year should protect the General Fund from a major reduction in this revenue source in fiscal year 2024, but the rate reductions will likely have a much greater impact in 2025 and continue into 2026.”
Alabama Daily News' Kate Essig contributed to this report.
