Bill would phase out cities occupational taxes in AL

Published: Mar. 8, 2022 at 11:09 PM CST
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BIRMINGHAM, Ala. (WBRC) - If you work in Birmingham or in dozens of other cities in Alabama, you pay an occupational tax. A bill in front of the legislature would eventually get rid of all of them if passed.

A bill making its way through the legislature would phase out occupational taxes in over two dozen cities in Alabama. Occupational taxes would decrease by 0.1% per year until they’re eliminated, according to State Senator Andrew Jones who is sponsoring the bill.

“I don’t think we need to be taxing people for the privilege of working because obviously people are employed and they’re making a living for their families and it’s an unfair tax in my opinion,” Jones, R- District 10 said.

The bill is getting pushed back from the League of Municipalities and other cities around the state.

“I’m going to do everything I can to kill it. I’m not going to make any secret about that,” Attalla Mayor Larry Means said.

Means did not hold back saying cities like his depend on that money. In some cases, the occupational tax is a big chunk of a city’s budget.

“With a small budget like ours, $11 or $12 million, it’s going to impact on down the road. Again, you don’t want to have to lay employees off. You want to be able to keep services up for the people. I’m totally against it,” Means said.

For cities like Attalla, with a 2% occupational tax, it would take 20 years to phase out. Jones understands some cities rely on occupational tax. Jones says phasing the tax out would minimize the impact on local budgets.

“The tax rates are just as high as they are in other places, but they have this additional means of taxation which is an unfair tax on working people for being employed in that area. I think it’s regressive. That’s the main reason why we need to repeal these taxes and eliminate them,” Jones said.

We also heard from nearby Gadsden about this bill. The city says the occupational tax makes up about 30% of its budget and the effects of repealing it would be detrimental for years and decades to come.

“Even a reduction of a tenth of a percent per year would mean a loss of more than $750,000 in the first year and an additional $750,000 each following year. Without this funding, there would be a necessary cutback in city services and outside agency funding, along with a reduction in workforce and added strain in meeting existing financial obligations. A loss of revenue would also negatively affect the city’s bond rating and future financial situation. Gadsden is one of five municipalities in Etowah County that collect occupational taxes and oppose the proposed bill. Despite decades-long shifts in population, the city remains the economic and cultural hub of the area, and the proposed bill would have decades of negative impact on Gadsden and Etowah County.”- city of Gadsden spokesperson

The bill has moved out of committee in the senate. We’ll keep you updated on the progress.

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