Lawmaker files bill to change Alabama’s tax structure

State News

One Alabama legislator is seeking to do away with Alabama’s sales and income taxes, going as far as filing a bill on the matter in the Alabama House of Representatives

Mike Holmes, R-Wetumpka, recently filed HB3, also called the “Alabama Economic Freedom Act of 2019,” which seeks to amend the state constitution by repealing sections regarding income tax, sales tax, inheritance and estate tax, replacing it with a flat-rate tax of 8.03 percent on new products and services people buy and use.

“We really need to do something, because our income has shifted, if nothing changes we will be going backwards in revenue,” Holmes said on a recent episode of “Capitol Journal” on Alabama Public Television.

Under this plan, Alabama would join nine other states without an income tax. In addition, Holmes said his plan would also attract more jobs. 

“They don’t want to be in a income tax state they want to be in an income tax free state,” he said.

However, This plan doesn’t sit well with people who advocate for low income families.

“If you think that the biggest problem in the state is that wealthy folks and corporations pay too much in taxes already, this would be the plan for you,” said Chris Sanders, communications director for Alabama Arise.

Sanders said he is concerned that the bill could hurt money meant for education in Alabama. The state’s education budget is primarily made up of money generated from sales tax revenue.

“We’re concerned this might not bring in enough money to prevent massive education cuts,” he said.

Here’s a breakdown of Alabama’s tax collection:

If the bill is approved by the Legislature, it would be voted on by the people of Alabama.

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