Mayors of Alabama’s largest cities want to open up the hood on the state’s online sales tax program, amid worries that cities that impose high sales tax rates may be losing out on revenue.
AL.com reports mayors of the state’s 10 largest cities want state lawmakers this year to mandate more data be provided about online sales taxes.
While the combined city, county and state sales tax rate in most Alabama cities is higher than 9%, the state’s Simplified Sellers Use Tax collects only 8%.
Whether traditional sales tax or online tax is collected, the state gets a 4% cut. Cities get 60% of the other half of the 8% online rate, while counties get 40%, with individual amounts determined by population.
That’s a good deal for counties, because Alabama cities often reap a larger share of local sales tax revenue. Cities and counties fought over how the money was divided in 2018 and 2019. The program generated $634 million in the budget year ended Sept. 30, up 65% over two years.
Mayors aren’t yet proposing a re-division. Instead they say they want figures on where purchases are coming from, so they can compare that to their current shares of online sales tax.
“With transparency, we can ensure that our schools, police departments and road networks are receiving the investments they have earned,” Tuscaloosa Mayor Walt Maddox said.
No bill to require more data has yet been filed.
Sonny Brasfield, executive director of the Association of County Commissions of Alabama, said he believes mayors want a larger share of the pie.
He said that to meet mayors’ demands, the state would have to repeal confidentiality laws that bar disclosure of how much any one taxpayer pays.
“No city in Alabama can disclose the amount of sales tax paid by an individual business inside its jurisdiction,” Brasfield said. “That information is private and essential to a business’ success.”
The mayors say they need to know the total online sales tax activity originating in their cities, not how much any one business pays. They also argue that the 8% rate is unfair to businesses that must charge higher rates for purchases made at their stores.
“We think that cities, counties, school systems, and Alabama taxpayers ought to be able to get a clear picture of our how online sales tax system works in order to have certainty and plan for the future and know that our local small businesses are being treated fairly,” said Mobile Mayor Sandy Stimpson.
Frank Miles, a spokesman for the Alabama Department of Revenue, said state law currently precludes the type of disclosures the mayors might be seeking, because Alabama only collects statewide online sales figures and is barred from collecting local level data.
Republished with permission from The Associated Press.