Brian Lyman

Montgomery Advertiser

Timothy Williams liked the deal on pork chops at Costsaver on Atlanta Highway on Tuesday.

He didn’t like the 10 percent tax he had to pay on them.

“You can’t avoid it in Alabama,” said Williams, a Montgomery resident who works at Hyundai. “The sales tax on groceries is ridiculous. I’ve lived in Michigan, and I don’t think the sales tax on groceries is anywhere near ours.”

Catrice Floyd, shopping with her son Byron, didn’t like the tax, either.

“Sometimes I go out on base because there’s no tax out there,” she said. “But I live off Taylor Road, this is closer and we were coming to Krispy Kreme today.”

Defenders of the state’s sales tax on groceries are harder to find than quality-of-life measures led by Alabama. The state is one of the few in the nation that fully tax groceries, and it’s a major cost. More than 90 percent of Alabama’s population lives in areas with a combined sales tax of 9 percent or more.

Legislators say they don’t like the tax, and a handful of lawmakers have filed proposals to repeal it. Yet for all its unpopularity, neither party has made repeal of the tax a priority in statewide campaigns, and efforts to do away with it can turn tax-cutting warriors into reverent revenue watchers.

The reasons stem as much from what the sales tax sustains as popular opinion. Most of the levy on groceries goes to the education budget, and legislators say they don’t want to take away the tax — estimated to bring in $364.4 million this year, about 6 percent of the Education Trust Fund — without something to replace it.

“There are a lot of approaches that could restore that revenue,” said Rep. Bill Poole, R-Tuscaloosa, the chairman of the House Ways and Means Education Committee. “The question is, is there the legislative will to enact those?”

But to Rep. John Knight, D-Montgomery, who has fought to repeal the sales tax on groceries for years, that approach fits oddly with previous legislative efforts to extend millions of dollars in tax breaks to attract businesses and corporations, without any thought of replacing the revenue.

“Why make a different argument when it comes to poor people?” he said last month, shortly after Gov. Robert Bentley created a task force to study the issue.

Tax chicken, not chicks

Alabama has taxed groceries since the Legislature created the sales tax in 1939. According to the Legislative Fiscal Office, there are 89 separate exemptions to the state sales tax, ranging from prescription drugs to carriers for baby chicks to chicken antibiotics. But food sold in a supermarket remains subject to tax.

“We’ve got a lot of tax breaks out there — agricultural (breaks), for luxury purchases, cars, and boats, but people who can’t afford a car or a boat have to pay tax on basic food like rice and beans,” said Kimble Forrister, executive director of Alabama Arise, which has campaigned against the sales tax on groceries for decades.

While most states exempt groceries from taxes, all of Alabama’s neighbors except Florida allow some measure of tax on groceries. But Georgia exempts groceries from its 4 percent state sales tax (local taxes still apply); Tennessee reduces its state sales tax from 7 percent to 5 percent on groceries. Mississippi fully taxes food at a state rate of 7 percent, though its local option sales tax is limited to 1 percent.

Over time, the full tax takes a toll. A Montgomery family spending $150 a week on groceries will, with taxes, pay $8,580 over a year. The same family spending $150 a week in Richmond County, Georgia, with roughly the same demographics as Montgomery but without a state sales tax, spends $8,112 a year.

That’s a difference of $468, or more than three weeks’ worth of groceries.

“Sometimes I wish we didn’t have tax,” said Darylneshia Harris, a customer service representative from Montgomery who went to Costsaver on Wednesday to pick up items for a party. “Bu a 10 percent tax, we get used to it now.”

Taxing groceries may not just cost people money; it may also make it harder for them to get food when they need it. A 2016 study that compared Alabama recipients of the Supplemental Nutritional Assistance Program (SNAP) — not subject to the state sales tax — to those who did not found that the taxes made it more difficult for non-SNAP recipients at or near the poverty level to get an adequate amount of food.

“States that tax food need to understand that this policy is increasing food insecurity among its poorer residents that do not participate in SNAP,” the study said. “To improve food security in these states, policy makers should look at ways to lessen the burden of this tax on non-SNAP households, particularly on lower income SNAP-eligible households.”

Norbert Wilson, a Tufts University professor who co-authored the study while at Auburn University, stressed in a recent interview that the study looked at only one year of data for the state and that the study itself — presented at a conference last year — still awaited peer review. But he said controlling for the things like household income and poverty pointed to the tax being the driver of food insecurity.

“If there were a lower rate, from our estimate, a lower rate of food insecurity would be produced,” he said. “If we lowered it, it would be better than nothing at all.”

Padlocks and handcuffs

The Legislature traditionally draws people who would tear taxes apart with their teeth if given the opportunity. But when it comes to the sales tax on groceries, a caution creeps into many legislators’ statements.

In part, it’s dictated by Alabama’s bottom-down tax structure, and the very limited resources available to fund basic services. Income and property tax rates can change only through constitutional amendment. The state’s income tax rates and income brackets are the same as they were in 1933.

The padlock on other taxes makes the sales tax, which falls disproportionately on poorer Alabamians, more important to making ends meet.

“We don’t have enough other taxes to depend on,” Forrister said. “The main thing is that we’re heavily taxing low and middle-income people and we’re undertaxing high-income people.”

The $364 million that the sales tax on groceries about 16 percent of the total sales taxes collected in the state. That handcuffs legislators looking to get rid of the tax.

“That’s always been the stumbling block to the elimination of that sales tax,” Poole said. “It’s not going away until policymakers decide there’s a way to address that revenue shortfall or absorb that shortfall. That’s where that issue has remained stuck for many.”

Knight and other legislators for years tried to couple the removal of the grocery tax with the repeal of a 1965 amendment, passed amid the height of the civil rights movement, allowing state residents to deduct their federal income taxes off their state taxes. The LFO estimates the deduction is worth about $616 million a year, nearly all of which would go to the education budget.

It was the only approach to grocery tax repeal then then-powerful Alabama Education Association would accept. But repealing the amendment — whose provisions chiefly benefit the wealthy — ran into opposition from Republicans and conservative Democrats, who considered that a tax increase.

The House of Representatives in 2008 managed to narrowly pass an amendment repealing the deduction and the sales tax. The amendment made it through a Senate committee, but never escaped the chamber itself. No proposal has come closer to passage, though Sen. Gerald Dial, R-Lineville, has proposed an gradual elimination of the tax on food with a corresponding one percent increase in the general tax, from four to five percent. That proposal has made it out of committee but never gotten much farther, because of concerns about raising the tax.

"I hope they find a magic wand," Dial said. "I’ve been looking at this for 20 years, and I haven’t found it. You can’t take it off without replacement."

Knight now advocates for repeal without replacement, arguing much of the revenue returned to Alabamians will return to state coffers as residents spend money on other items subject to the sales tax.

But the projected hit on the education budget inhibits many legislators from making the repeal a priority in political campaigns. Knight said the firepower trained on many other issues in the Legislature does appear when it comes to the grocery tax.

“You don’t have any high-paid lobbyists lobbying for this,” said Knight. “The people most helped by this have to go to work every day, so they’re not lobbying for this.”

Complete repeal of the sales tax on groceries would be politically difficult. The tax brings in plenty of money for local municipalities. In Montgomery, the local share of the tax should bring in $5.5 million this year, about 5 percent of the city’s total sales tax revenue. But repealing the state share of the tax would provide some relief: A family spending $150 a week on groceries would save about $312 over a year with the 4 percent state tax removed.

Bentley’s task force, scheduled to give a report to the governor on approaches to the tax by June 1, had not met as of Wednesday.

“I want to get out around the state and talk about that,” the governor said Wednesday. “That’s the most popular issue in Alabama.”

Outside of Publix on Vaughn Road on Wednesday, Don Karle, retired from the Air Force, said he’s gone shopping at the PX on the military base to avoid the tax. But it’s not usually a practical option.

“I would support (repeal) because it’s a regressive tax and hits folks who make a lot and don’t make a lot,” he said. “They’d have to figure out how to suck money out of your pocket from somewhere else.”

At Costsaver, Williams said he would save money gained from any tax reduction or repeal. But he said the main issue was helping people afford groceries.

“We have to eat, you know,” he said.

Our neighbors

How surrounding states handle food taxation:

Florida: Most food is free from the state's 6 percent sales tax and local sales taxes, though food intended for immediate consumption may be subject to a sales tax.

Georgia: State's 4 percent sales tax does not apply to groceries, though localities may still tax food. Exemption does not apply to prepared food.

Mississippi: Fully taxed at state's 7 percent rate, though local option sales taxes cannot exceed one percent.

Tennessee: State sales tax on "food and food ingredients" reduced from 7 percent to 5 percent. The rate does not apply to candy, alcohol or prepared food.