Selma City Council passes $17.4 million budget for 2019
During a special meeting called Wednesday, the Selma City Council passed a $17.4 million budget for Fiscal Year 2019. The budget passed with the support of Council President Corey Bowie, Councilmen Sam Randolph and Carl Bowline, Councilwomen Susan Youngblood, Miah Jackson, Angela Benjamin and Jannie Thomas. Meanwhile, Councilmen John Leashore and Michael Johnson abstained from the vote. Wednesday marked the first time since 2016 that a budget has been passed in Selma, according to the Selma-Times Journal, as the city functioned on an amended 2016-2017 budget last year. Last month, Mayor Darrio Melton presented a $22 million dollar budget to the council that they rejected. According to Bowie, Wednesday’s passed budget is a scaled down version of Melton’s.
Wetumpka City Council okays sales tax increase
The Wetumpka City Council approved an amendment to the current tax ordinance raising the sales tax by one percent during Monday’s council meeting. By a vote of four to one, the amendment passed. It’s the first sales tax increase the city has seen in more than 20 years — raising the tax from 8 percent to 9. Translation: the city will now collect 4 cents on every dollar spent. This raises the tax from an 8 percent sales tax rate to 9 percent, meaning the city will collect 4 cents per dollar spent. Currently Wetumpka’s combined tax rate is 8 percent, the lowest in the River Region. Nearby municipalities all have higher sales tax rates: Millbrook: 8.5 percent Prattville: 9.5 percent Montgomery: 10 percent According to alabamanews.net, Wetumpka Mayor Jerry Willis says the increase will generate nearly two million dollars in revenue that the city will use to grow it’s savings reserves and pay off the city’s debts. “We’ve depleted a lot of our reserves,” Willis said. “We’ve gotta build those back in case of emergencies and different that we could get ourselves into.” More than 120 city employees will also see a raise, many of whom have not had a raise in over five years. Wetumpka’s new sales tax increase will take effect in September
Alabama Back-to-School Sales Tax Holiday weekend set for end of July
If you want the most bang for your buck when it comes to back-to-school shopping, save the date and get ready to purchase supplies July 20-22. It’s the state’s 13th annual sales tax holiday for school-related items. From 12:01 a.m. Friday, July 20, until midnight, Sunday, July 23, the state waives its four-percent sales tax on school-related supplies and clothing. Shoppers can avoid paying taxes on clothing worth less than $100, including school uniforms, shoes, shocks or diapers. Accessories, protective equipment and sports gear cannot be sold tax-free. Computers can be sold tax-free if the individual parts are sold as a package worth less than $750. School supplies worth less than $50 including ink and paper are tax-free. School books worth less than $30 are eligible for the exemption. More than 300 cities and counties throughout Alabama have agreed to waive their local taxes as well, for a savings of up to 10 percent in some areas. Check the 2018 participating cities and counties list to determine if your local communities are participating. #ShopAlabamaForTheKids In addition to encouraging shoppers to buy from local retailers by promoting the use of their hashtag #ShopAlabama, the Alabama Retail Association will also promote #ShopAlabamaForTheKids, a new extension of their campaign. There, they will ask shoppers to consider picking up an extra school supply or two to donate to local school children in need. They have partnered with nonprofit organizations to promote and support school supply drives throughout the state. MONTGOMERY AREA: Drop off donated school supplies at HandsOn River Region at 101 Coliseum Boulevard, Montgomery, AL, Monday through Thursday, 8:30 a.m. – 3:30 p.m. BALDWIN COUNTY AREA: Drop off donated school supplies at the Eastern Shore Chamber of Commerce at 327 Fairhope Ave., Fairehope, AL, or Baldwin County United Way at 700 N McKenzie Street, Foley, AL.You can also support the Eastern Shore Chamber of Commerce Young Professionals and United Way of Baldwin County Young Leaders at their “Pencils & Glue for Bingo & Brew”. The event is a school supply fundraiser for the Rotary Youth Club and Ruff Wilson Youth Center. It is Thursday, July 26, from 5:30 – 8 p.m. at Fairhope Brewing Company. Admission is a $10 donation or a bag of school supplies. DOTHAN AREA: Drop off supplies for the Dothan Education Foundation at Wiregrass Commons Mall (Mall Office) or Army Aviation Federal Credit Union from July 19 until July 30. You can also take part in the 2018 Back-to-School Bash on Saturday, July 21 at Wiregrass Commons Mall. Families will have an opportunity to help Dothan Education Foundation “STUFF THE BUS” for Dothan City Schools
Here’s what the SCOTUS ruling that states can collect online sales tax means for Alabama
In a decision that will impact online shopping for all Alabamians, on Thursday the U.S. Supreme Court upheld a South Dakota law that required online companies to collect and remit state sales taxes, even if that company did not have a ‘physical presence’ in the state. In the landmark ruling, the court reversed a 26-year-old decision and in saying that states can require internet retailers to collect sales and use tax in states where they lack a physical presence. In Alabama Alabama is expected to be among the states most likely to see the biggest percentage increase in revenue based on the Barclays research. The ruling is likely to lead the Yellowhammer State to collect sales tax on purchases from out-of-state online businesses more aggressively. Translation: many consumers will likely pay more at the online checkout. History behind the opinion Justice Anthony Kennedy, who wrote the majority opinion in the 5-4 decision, said the 1992 decision, known as Quill, resulted in “a judicially created tax shelter for businesses that decide to limit their physical presence and still sell their goods and services to a state’s consumers — something that has become easier and more prevalent as technology has advanced.” According to the U.S. Census Bureau, from 1992 to 2018 internet and mobile sales have grown from zero to nine percent of all retail sales. Online sales are growing at four times the rate of total retail sales – 16 percent vs. 4.4 percent. The pre-internet era physical presence rule put “local businesses … at a competitive disadvantage relative to remote sellers,” and it “produced an incentive to avoid physical presence in multiple states,” Kennedy wrote in his opinion. Prior to the SCOTUS ruling In 2015, Alabama was looking for a solution to the problems they were encountering due to the Quill decision. That year, the Alabama Department of Revenue (ADOR) adopted a Simplified Sellers Use Tax program (SSUT) that took effect October 22: “Pursuant to this rule, an out-of-state seller with a substantial economic presence in Alabama will be required to collect and remit Alabama tax on its sales into the state, regardless of whether it has an Alabama physical presence. The rule imposes a collection obligation on out-of-state sellers who engage in one or more of the activities listed in Code of Alabama 1975, Section 40-23-68, activities subjecting out-of-state sellers to the state’s sellers use tax levy, and who had $250,000 or more in retail sales sold into Alabama in the previous year. Out-of-state sellers may satisfy the rule’s requirements by collecting, reporting and remitting tax on sales made into Alabama pursuant to the provisions of Article 2, Chapter 23 of Title 40, Code of Alabama 1975, or by participating in the Simplified Sellers Use Tax Remittance Program.” SSUT allowed, and continues to do so, participating sellers to collect, report, and remit an eight percent simplified sellers use tax on sales of tangible personal property delivered to Alabama purchasers, covering both state and local taxes. If SSUT is collected, neither the purchaser or the seller are liable for any additional use taxes on the transaction, regardless of whether the actual combined local and state rate is higher than eight percent. Before the SSUT was launched in 2015, online sellers with no physical presence in the state had no obligation to collect and remit use taxes on sales made within the state. Not only did this result in millions of dollars of revenue lost, but it also meant that brick-and-mortar retailers in the state, who did collect and remit sales tax, were at a disadvantage. In April 2018, Gov. Kay Ivey signed into law HB470, which amended the 2015 SSUT law by requiring online marketplaces to collect and remit use taxes on sales made through their marketplaces by third-party sellers, or to report such sales to the Alabama Department of Revenue and notify customers of use tax obligations. The legislation also allows existing sellers participating in the SSUT that establish a physical presence in this state, only through the acquisition of an in-state business, to continue to participate in the SSUT program. What the changes mean for Alabama? Since it’s inception, approximately 185 online vendors have voluntarily joined the state’s SSUT program. They are protected from a change in the physical presence rule. Only if the change in law is caused by “the enactment of federal legislation” is their grandfather protection voided (see Ala. Code § 40-23-191 et seq.). What they’re saying “The U.S. Supreme Court has ruled that online-only sellers should have to play by the same rules that in-state retailers do. Local retailers have been playing by the rules and collecting state sales tax on every purchase, every year since the Supreme Court’s original decision,” said Rick Brown, president of the Alabama Retail Association. “This is a victory for Alabama’s Main Street retailers. No longer will the federal government select winners and losers in the retail industry. Our 4,200 retail members and our association have advocated for this decision for decades.” Brown added, “Out-of-state, online-only businesses will no longer have an unfair advantage over our friends and neighbors who own local businesses. This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules whether they sell merchandise online, in-store or both.” Ivey says the decision “will promote parity between our state’s brick and mortar businesses and competing out-of-state sellers.” “Technology and the advent of e-commerce has drastically changed the retail landscape and the states’ ability to collect sales taxes. The Supreme Court’s ruling related to online sales taxes is a common-sense approach that modernizes existing limitations on the taxation of e-commerce sales and will facilitate collections in our global, technology-driven economy,” said Ivey. “The change effected by the Court’s decision will promote parity between our state’s brick and mortar businesses and competing out-of-state sellers.” ADOR has not responded to request for comment at the time of publishing. *This article will be updated as the decision is reviewed further.
US Supreme Court says online shoppers can be forced to pay sales tax
States will be able to force shoppers to pay sales tax when they make online purchases under a Supreme Court decision Thursday that will leave shoppers with lighter wallets but is a big win for states. More than 40 states had asked the high court to overrule two, decades-old Supreme Court decisions that they said cost them billions of dollars in lost revenue annually. The decisions made it more difficult for states to collect sales tax on certain online purchases. On Thursday, the Supreme Court agreed to overturn those decisions in a 5-4 ruling. The cases the court overturned said that if a business was shipping a customer’s purchase to a state where the business didn’t have a physical presence such as a warehouse or office, the business didn’t have to collect the state’s sales tax. Customers were generally responsible for paying the sales tax to the state themselves if they weren’t charged it, but most didn’t realize they owed it and few paid. Justice Anthony Kennedy wrote that the previous decisions were flawed. “Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States. These critiques underscore that the physical presence rule, both as first formulated and as applied today, is an incorrect interpretation of the Commerce Clause,” he wrote in an opinion joined by Justices Clarence Thomas, Ruth Bader Ginsburg, Samuel Alito and Neil Gorsuch. In addition to being a win for states, the ruling is also a win for large retailers, who argued the physical presence rule was unfair. Large retailers including Apple, Macy’s, Target and Walmart, which have brick-and-mortar stores nationwide, already generally collect sales tax from their customers who buy online. That’s because they typically have a physical store in whatever state the purchase is being shipped to. Amazon.com, with its network of warehouses, also collects sales tax in every state that charges it, though third party sellers who use the site to sell goods don’t have to. But sellers that only have a physical presence in a single state or a few states have been able to avoid charging customers sales tax when they shipped to addresses outside those states. Online sellers that haven’t been charging sales tax on goods shipped to every state range from jewelry website Blue Nile to pet products site Chewy.com to clothing retailer L.L. Bean. Sellers who use eBay and Etsy, which provide platforms for smaller sellers, also haven’t been collecting sales tax nationwide. Under the Supreme Court’s decision Thursday, states can pass laws requiring sellers without a physical presence in the state to collect the state’s sales tax from customers and send it to the state. The National Retail Federation trade group, said in a statement that the court’s decision was a “major victory” but the group said federal legislation is necessary to spell out details on how sales tax collection will take place, rather than leaving it to each of the states to interpret the court’s decision. Chief Justice John Roberts and three of his colleagues would have kept the court’s previous decisions in place. Roberts wrote that Congress, not the court, should change the rules if necessary. “Any alteration to those rules with the potential to disrupt the development of such a critical segment of the economy should be undertaken by Congress,” Roberts wrote in a dissent joined by Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor. The case the court ruled in has to do with a law passed by South Dakota in 2016. South Dakota’s governor has said his state has been losing out on an estimated $50 million a year in sales tax that doesn’t get collected by out-of-state sellers. Lawmakers in the state, which has no income tax, passed a law designed to directly challenge the Supreme Court’s 1992 decision. The law requires out-of-state sellers who do more than $100,000 of business in the state or more than 200 transactions annually with state residents to collect sales tax and turn it over to the state. South Dakota wanted out-of-state retailers to begin collecting the tax and sued several of them: Overstock.com, electronics retailer Newegg and home goods company Wayfair. The state conceded in court, however, that it could only win by persuading the Supreme Court to do away with its physical presence rule. After the decision was announced, shares in Wayfair and Overstock both fell, with Wayfair down more than 3 percent and Overstock down more than 2 percent. The Trump administration had urged the justices to side with South Dakota. The case is South Dakota v. Wayfair, 17-494. Republished with permission from the Associated Press.
Wetumpka mulls sales tax increase, first in 20 years
The Wetumpka City Council is mulling a sales tax increase Mayor Jerry Willis says the hike would be the first sales tax increase in more than 20 years. Currently, Wetumpka’s combined rate is 8 percent, the lowest in the River Region. Nearby municipalities all have higher sales tax rates: Millbrook: 8.5 percent Prattville: 9.5 percent Montgomery: 10 percent According to alabamanews.net, Willis says a one percent sales tax increase will help meet the needs of the city without having to cut services. “Hey, nobody likes taxes. We don’t like taxes. But when our auditors come to us for the past two years and give the final report and say ‘you can’t keep laying people off, Mayor,’” said Willis. He continued, “A one cent sales tax increase will generate us one million dollars. Two million dollars would give us the opportunity to take care of our employees, get them where they need to be. They haven’t had a pay increase in over five years.” The City Council did the first reading of the proposed amendment to the current tax ordinance during Monday night’s council meeting, opening the door for a future vote. The City Council is scheduled to meet next on Monday, July 2.
Daniel Sutter: Sales taxes and Alabama’s future economy
Presidential tweets and a Supreme Court case have reignited the question of taxing internet sales. The Court in April heard arguments in South Dakota v. Wayfair regarding whether a retailer must have physical presence in a state to have to remit sales taxes. The physical presence rule goes back to 1967 and mail order catalogs. E-commerce has been costing state and local governments tax revenue, as South Dakota argued in the case. But instead of trying to collect sales taxes online, perhaps we should abandon a 20th Century economy tax. General sales taxes produced 23 percent of state and local tax revenues nationally in 2015, while “selective sales taxes” on gas, tobacco, and alcohol contributed another 11 percent. Alabama raises 48 percent of our tax revenue from these taxes. Abandoning sales taxes would open a chasm in Alabama government budgets. Economics shows that we will have less of anything which we tax. Taxes affect our behavior, creating a cost beyond the revenue raised for the government. “Optimal tax theory” examines keeping this extra cost as low as possible while raising needed government revenue. Efficiency is not, of course, the only factor for evaluating taxes, as most of us also care about fairness. First widely used in the 1930s, sales taxes readily funded local governments when most people shopped at stores near home. The local sales taxes Alabamians paid went to their city or county government. Times have changed. Sales taxes have always had drawbacks. For one, they are regressive, meaning that taxes as a percentage of family income falls as income rises. Although economists disagree about how progressive taxes should be (with a progressive tax, payments as a percentage of income increase with income), few view regressive taxes as fair. Beyond regressivity, services have also proven hard to tax. Malls and big box stores avoided a local sales tax by locating beyond the city limits. Consumer use taxes, enacted for purchases made without paying sales taxes, have proven cumbersome. High taxes on cigarettes have led to cross-border shopping and smuggling. Online retailing worsened collection problems. Although Amazon now generally collects sales tax, universal collection will be neither easy nor cheap. Differential tax treatment of online and brick-and-mortar sellers raises economic and fairness concerns. Avoiding sales taxes helps keep inefficient online retailers in business. And brick-and-mortar retailers face unfair competition when consumers can avoid sales taxes online. Internet shopping has improved life for shoppers and entrepreneurs. Shoppers can choose from sellers world-wide without leaving the house. Makers of unique products no longer need to rely on mail order catalogs, and social media groups promote the products to interested consumers. The cost of collecting sales taxes for small businesses, however, is substantial: 13 percent of tax revenues for small retailers, versus 2 percent for large retailers. Public service ads today encourage people to shop local retailers to fund local government. But optimal tax theory says we should not let taxes distort economic activity too much. Should we potentially halt the evolution of e-commerce, and all the benefits this may bring, simply because local governments can more easily collect sales taxes from local stores? Our city and county government provide valuable services like police and fire protection, streets, schools, and garbage collection. These services should be adequately funded. I also believe in federalism and want local governments to impose their own taxes. Having Washington collect more taxes and then fund local governments undermines federalism. Alternatives exist for sales tax revenues. In Alabama, our lowest in the nation property taxes represent an alternative. We might want to try pollution taxes, which promise sound environmental policy and could fund government. Should we substantially revamp our tax system? If sales tax collection does not stifle e-commerce, my concern becomes moot. Ultimately government in the United States is supposed to serve our interests. Perhaps sales taxes are as outdated as Sears, Toys-R-Us, and the famous retailers who collected them. ••• Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s and do not necessarily reflect the views of Troy University.
Donald Trump renews Twitter criticism of Amazon
President Donald Trump is renewing his attacks on e-commerce giant Amazon, and he says the company is “doing great damage to tax paying retailers.” Trump tweets that “towns, cities and states throughout the U.S. are being hurt – many jobs being lost!” The president has often criticized the company and CEO Jeff Bezos, who also owns The Washington Post. Many traditional retailers are closing stores and blaming Amazon for a shift to buying goods online. But the company has been hiring thousands of warehouse workers on the spot at job fairs across the country. Amazon has announced goal of adding 100,000 full-time workers by the middle of next year. Trump has in the past tweeted that Amazon was not paying “Internet taxes.” But it’s unclear what he meant by that. Amazon.com collects state sales taxes in all 45 states with a sales tax and the District of Columbia, according to their website. State governments have sought to capture sales taxes lost to internet retailers, though they have struggled with a 1992 Supreme Court ruling that retailers must have a physical presence in a state before officials can make them collect sales tax. Amazon did not immediately respond to an emailed request for comment. Republished with permission of The Associated Press. Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost! — Donald J. Trump (@realDonaldTrump) August 16, 2017
Alabama’s back-to-school tax-free weekend set for Aug. 5-7
Get ready Alabamians, the state will hold its11th annual back-to-school tax-free weekend Friday, Aug. 5-Sunday, Aug. 7. Ushering in the start of the new school year, the annual holiday begins at 12:01 a.m. Friday and ends at 11:59 p.m. Sunday. During that time, consumers can buy certain school supplies, computers and clothing, free of state’s four-percent sales tax. “You don’t have to be a student or even an Alabama resident to save money the weekend of Aug. 5-7 because of the annual Back-to-School Sales Tax Holiday,” said State Revenue Commissioner Julie Magee. “Products include items such as clothing, sports equipment, computers, and of course school supplies.” Local governments had until July 5 to notify the Alabama Department of Revenue of their decision to participate in this year’s sales tax holiday. As of July 26, 293 localities are participating. “During this time, certain products can be purchased without the 4 percent state sales tax, and if the city and county are participating as well, that tax will be waived, too,” Magee explained. “For example, all residents of Mobile County living in the Mobile city limits will be exempt from all of the sales tax — totaling 10 percent of the purchase price of qualifying products.” The Alabama Retail Association (ARA) predicts Alabamians will spend almost $1.14 billion on back-to-school shopping. Alabama sales generally represent 1.5 percent of all retail sales nationally. The National Retail Federation projects $75.8 billion will be spent nationally this back-to-school shopping season. For many retailers, the back-to-school shopping period is their second busiest time. “Outside of December, [the sales tax holiday] is probably our biggest weekend of the year,” Michael Gee, president and co-owner of the Pants Store and an Alabama Retail board member, told the ARA. Alabamians will spend more than $4.5 billion in August, ARA projects. That is all taxed sales, all month, not just on back-to-school and represents a 2.5 percent growth over 2015, when Alabamians spent almost $4.4 billion in August. To review tax-free apparel and school supplies, check out this list.
Alabama ranked 8th lowest tax burden in the U.S., says study
With less than a week remaining until Tax Day, Americans across the country are finding the current tax code too confusing to determine exactly how much their home states are actually taking from their income in taxes. Which is why personal finance website, WalletHub, conducted an in-depth analysis of states with the highest and lowest tax burdens. As luck would have it for Alabamians, the state ranks toward the bottom of the list of states with the highest tax burdens in the country with the 8th lowest tax burden in the country. Tax Burden in Alabama (1=Highest, 25=Avg.): 43rd: Overall tax burden (7.41%) 49th: Property tax burden (1.51%) 35th: Individual income tax burden (1.90%) 16th: Total sales and gross receipts tax burden (4%) In order to determine which states tax their residents most aggressively, WalletHub’s analysts compared the tax burdens of the 50 states by measuring property taxes, individual income taxes, and state and gross receipts taxes — the three components of state tax burden — as percentages of the total personal income in each state. While Alabama ranked the 8th lowest in overall tax burden, the state ranked as the nation’s 16th highest sales tax burden. “The least fair tax is the sales tax specifically sales tax levied on life’s necessities, such as food purchased in grocery stores,” said David Shock, a professor of political science at Kennesaw State University an expert who weighed in on the study. Shock explained that southern states, like Alabama and Tennessee, the poor often pay a higher percent of their wages in state and local taxes have because these states still tax grocery items, while many states across the country no longer tax such necessities. Here’s how the entire country ranked: Source: WalletHub
State sales tax holiday exempts weather preparedness items
In the wake of tornado warnings and watches that have flashed across the state map over the past few weeks, Alabamians in several municipalities will have a little financial help this weekend readying for future weather emergencies. Alabama’s fifth severe weather preparedness sales tax holiday kicked off early Friday and will continue through Sunday, ending at midnight. The holiday exempts state sales tax and local sales tax at businesses in participating municipalities on certain severe weather preparedness supplies. Gov. Robert Bentley declared a state of emergency in Alabama on Tuesday when five confirmed tornadoes occurred in Alabama. “State officials purposely designed Alabama’s weather preparedness tax holiday, which always falls on the last full weekend of February, to occur before the height of both tornado and hurricane seasons,” said Nancy King Dennis, director of public relations for the Alabama Retail Association. While all state tax is exempt, individual municipalities and counties have the option to waive local tax. The tax-exempt status applies to a specified list of supplies costing less than $60 that would be helpful for a home or business to have on hand during a weather emergency, including batteries, tarps, weather radios and more. Also, any portable generator or power cords that cost $1,000 or less in a single purchase are included. “The goal of Alabama’s fifth annual severe weather preparedness sales tax holiday is to encourage consumers to stock up on emergency supplies before the storm hits,” Dennis said. “Consumers tend to wait until after the fact to get the supplies needed, which can put them in harm’s way if they venture out in hazardous conditions.” Dennis added that the holiday encourages consumers to build emergency kits for homes, vehicles and businesses in advance. “The sales tax holiday provides a good time to do that and save money,” she said. In Auburn, Cindy Salter, manager of Ace Hardware on East University Drive, said that she does notice that certain items typically get more attention on the holiday weekend. “We don’t see a higher traffic flow of customers, but we do have a higher traffic flow of particular products,” she said, adding that batteries, flashlights, tarps and ropes tend to be popular. Salter said she thinks the holiday is a good incentive to check on one’s emergency preparedness items. “Because number one, it’s tax-free,” she said. “That’s always a big help. And also because it makes them aware of the necessities that they need during severe weather, and it gives them an opportunity to stock up on them.” In Opelika, Dozier Smith T, owner of Winston Smith T Building Supply, said people often seem to wait until after there is a weather emergency to act. “It’s always good to be prepared,” Smith T said. “A lot of times, you don’t know when an emergency’s going to happen, there’s a run on things, and you might end up not having it.” Republished with permission of the Associated Press.
