2-Month Grocery Tax Halt Ended July 1st, Now What?
If you have been to the grocery store since July 1st, you may have noticed that you paid more. Shoppers are again paying the state’s 2% sales tax on food. The temporary moratorium set by the legislature has expired.
The state says that the temporary suspension was intended to provide short-term financial relief for residents facing higher food prices.
According to the U.S. Department of Agriculture, the average family of four spends around $1,000 a month on groceries. At 2%, the two-month state tax holiday saved most families about $40.
Alabama is now back to being one of only eight states that tax groceries. Hawaii, Idaho, Mississippi, and South Dakota tax it at the full state rate. Alabama's 2% is one of four states that tax groceries at a reduced rate.
In many states municipalizes and counties add taxes to groceries no matter what the state adds.
Alabama previously reduced grocery taxes from the full state rate to 4%, then to 3% and even further to 2%. In the spring legislative session lawmakers debated doing totally away with them but couldn't figure out how to replace it.
As a compromise they passed a temporary moratorium on any taxes during May and June. When that expired July 1st, it reverted back to the previous 2% tax.
Community support organizations like Alabama Arise point out that grocery taxes increase hunger rates and drives many struggling families deeper into poverty because people with low incomes pay a much higher share of their income in state and local taxes than the wealthiest households do.
“The grocery tax is a cruel tax on survival, "Alabama Arise Executive Director Robyn Hyden stated when the temporary suspension was announced. “It drives many families deeper into poverty, and Alabama Arise remains committed to the goal of eliminating it entirely.
Another effort to do completely away with grocery taxes is expected during next year's legislative session but the major sticking point will again be, how would the state replace the funds?
More From Tuscaloosa Thread
