Grocery tax debate renewed - WSFA.com Montgomery Alabama news.

Grocery tax debate renewed

MONTGOMERY, AL (WSFA) -

The debate over Alabama's tax on food and groceries could see a fresh take when the 2012 legislative session begins.

Sen. Gerald Dial (R – Lineville), is in the early stages of crafting a bill that would repeal the state's tax on groceries while increasing the state's overall sales tax rate.

"Why does Alabama continue to tax food?" Dial asked. "I've offered a solution to that and we'll see how it goes."

If his solution were to become law then starting in 2012, Alabama's tax on groceries would go down by 1% each year until 2015 when it would be eliminated. During that same period of time the state's overall sales tax rate for all other goods would increase by .25% each year up until 2015 when it would stop at a 1% increase. That would bring the state's sales tax to 5%.

That additional 1% Dial says would make up for the loss of revenue to the Education Trust Fund that comes with the repeal of the grocery tax.

Dial contends the proposal is revenue neutral, contrary to critics who say the bill is nothing more than a tax hike on the lower and middle class.

"It's not going to be a tax increase. It's not going to be more money" Dial said.

One of those critics is Rep. John Knight, (D – Montgomery), the former Chairman of the General Fund Budget Committee in the Alabama House of Representatives. For several years in a row, Knight proposed cutting the grocery tax and replacing the lost revenue with the scrapping of the states federal income tax deduction.

"It's just not fair," Knight said of the tax on groceries.

Knight is in staunch disagreement with Dial over his proposal to cut the tax on food.

"That's disingenuous to even recommend that. To even lead the voters to think that you're taking the sales tax off of groceries when you really are not if you are increasing it somewhere else" Knight said.

Dial counters that Knight's proposal, cutting the federal income tax creates a sort of "class warfare" over the issue.

"John knows that bill would never pass" Dial said. "If he's committed to taking the tax off food, I've got the only solution that will help us do that."

Dial hasn't yet pre-filed his bill for the 2012 legislative session because he says he's searching for cosponsors. Knight says he plans to file his proposal again.

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