Repeal of AL grocery tax could cost education budget millions - Montgomery Alabama news.

Repeal of AL grocery tax could cost education budget millions

Source: WSFA 12 News) Source: WSFA 12 News)

Gov. Robert Bentley and some lawmakers want to repeal the state's grocery tax, which would put about $350 million back into the pockets of Alabama families, but that money would come out of the state's education budget.

Bentley and some legislators say they don't believe the tax would need to be replaced with any new revenue.

“Well, people say 'How are you going to replace the money?'" said Rep. John Knight, D-Montgomery. "Well, you remove that tax on food it will turn over in the economy over and over again, so you won’t be losing that revenue.” 

“The assumption that $350 million would be returned is a very, very, very, very simplistic version,” Auburn Montgomery economics professor Keivan Deravi warned, explaining that Knight’s explanation makes assumptions.

According to Deravi there is no way of knowing how much the public would spend of the $350 million put back in their pockets by repealing the grocery tax. Some of the money could be saved or spent on non-taxable items, like in this case, on more groceries.

“Repealing and not replacing it with anything else would be a very risky proposition,” Deravi said. “Removing the grocery tax is the right thing to do because it is extremely regressive, but it has to be replaced by another sort of tax, something like a property tax that is based on wealth.”

The governor set up a task force earlier in the year to look at a potential repeal of the tax. Democrats are strongly pushing the legislation.

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