Montevallo opposes sales tax bill
Citing a potential loss of revenues, the Montevallo City Council voted Monday to go on record in opposition to an Alabama House bill that would return the authority to collect sales taxes by cities to the state.
According to John Abercrombie, revenue clerk for the city of Montevallo, House Bill 649 (the Streamline Sales Tax Bill) is expected to be among the first bills up for consideration on June 9, when the state Legislature returns into regular session.
The Legislature has met in special session during the past couple of weeks to debate Gov. Bob Riley’s $1.3 million revenue plan. They return to regular session on June 9.
The Montevallo City Council voted 4-0 to oppose the streamline sales tax bill in a special called meeting held in the absence of Mayor Grady Parker and Councilmember Paul Brown.
The meeting was presided
by Mayor Pro Tem Sharon Anderson who opposed the bill along with councilmembers Willie Goldsmith, Bob Lightfoot and Greg Pendleton.
According to the Alabama Department of Revenue, under the proposed legislation, the state Department of Revenue will operate in the capacity as the state level authority to collect and distribute local taxes and to conduct joint audits of sellers registered under the Streamlined Sales and Use Tax Agreement (SSTA).
The bill would require one tax return for each taxing period be filed for the state tax and all local jurisdiction taxes within the state and provides that the state Revenue Department must distribute local taxes collected within three business days after the payment is deposited.
It will also allow sellers who choose to do so to collect and remit state and local sales taxes electronically.
The state Revenue Department
also states that the proposed legislation will, &uot;slow the erosion in state and local sales and use tax bases caused by untaxed mail-order, Internet and other remote sales made in interstate commerce with voluntary collection and remittance by remote retailers of sales use taxes.&uot;
According to those who push the legislation, it would &uot;place Alabama in the position to be authorized to require all remote sellers to register, collect and remit state and local sales and use taxes to Alabama upon enactment of legislation by the U.S. Congress.&uot;
So, why the opposition?
Lightfoot, &uot;When we collect our own taxes, we can monitor to see how much each store owes, can pick up the check and have the money instantly.&uot;
He said if the state collects, the money will be held for a period of time, and the state does not have the manpower to monitor tax payments.
Abercrombie said Montevallo has been collecting its own sales tax since 1992 and immediately experienced an increase in revenues.
He also said the state did not have the manpower to pursue delinquencies.
Abercrombie said the proposed legislation takes away the city’s right to self collection and would restrict the city from doing its own audit of taxpayers unless the state instructs the city to conduct an audit.
He said the proposed bill calls for taxes to be collected electronically but questions whether people can afford it.
He also said the bill calls for distribution of the taxes within three days. But he said, &uot;I don’t have confidence in their ability to collect and distribute as well as we can ourselves.&uot;
Abercrombie further pointed out that the cost to the state to collect taxes will be about $5 million.
Montevallo City Clerk Steve Gibbs said in the past the state charged the city a fee of about $12 per taxpayer collected.
While proposed legislation does not call for a
collection fee to be charged to cities, Gibbs said,
&uot;I don’t believe that will last in the present budget crunch.&uot;
He said the state recently did not have even enough personnel to open income tax check envelopes.
&uot;I just think we will have less revenue, and if the state collects it, there will be a delay before it reaches us,&uot; she said.
In answer to a question from Lightfoot, Gibbs and Abercrombie said
the city saw a 12 to 15 percent increase in tax collections when it began self collecting sales taxes and eliminated a six to seven week delay in receiving tax revenues from the state.
Goldsmith said he did not see how the proposed legislation will help the city of
And while Pendleton said he is in favor of tax reform, he said he felt the proposed legislation is jumping into something without looking at the consequences it will have on municipalities.
Gibbs said the city’s resolution will be forwarded to all 35 state senators and 105 state representatives.
According to the resolution, the proposed bill represents &uot;potential revenue losses for the city of Montevallo,&uot; &uot;offers no guarantee of capital gain at the state level,&uot; &uot;reduces the city’s ability to audit businesses thereby reducing revenue to which we are entitled,&uot; and &uot;would create impediments that would prevent us from receiving money due to the city of Montevallo in a timely way, if at all.&uot;
And, according to the resolution, &uot;our stance is that the state is reacting prematurely and that the representatives would be more responsible to the counties and municipalities collecting sales and use tax to postpone legislation until the federal regulations are ultimately adopted.&uot;