Mayors from Alabama's Big 10 jurisdictions issue a declaration advocating for an overhaul of their state's internet sales tax policy.
The Alabama Big 10 Mayors, representing the ten largest cities in the state, including Auburn, Birmingham, Decatur, Dothan, Hoover, Huntsville, Madison, Mobile, Montgomery, and Tuscaloosa, have united in a call for an overhaul of the state's current internet sales tax system [1]. The issue, they argue, is putting a strain on city budgets and creating funding inequities for municipalities, schools, and small businesses [2][4][5].
At a recent meeting in Tuscaloosa, the mayors and city officials from numerous municipalities across Alabama discussed the Simplified Sellers Use Tax (SSUT) as a primary topic of concern. The current system, they contend, benefits large out-of-state corporations like Amazon and Walmart at the expense of Alabama small businesses [3].
Key issues include the fact that the SSUT imposes a flat 8% tax on online sales, but the revenue distribution is controversial. Half of the collected tax goes to the Alabama state funds, while the other half is split among local governments, a system that many local leaders argue is inequitable and insufficient for local needs [2][4].
Furthermore, within the local share, a dominant portion goes to Montgomery, with limited funding reaching many cities and counties. This, they argue, undermines their ability to sufficiently fund local schools, infrastructure, and municipal services [2][5].
The current system also disadvantages local brick-and-mortar businesses because online sellers have a uniform rate collection and distribution mechanism that does not mirror the complexity or local variations of point-of-sale taxes, leading to uneven competitive conditions [5].
Constructive solutions proposed by the Big 10 Mayors involve reforming the tax distribution formula to ensure more equitable and direct allocation of internet sales tax revenue to the local governments where the purchases occur. They also advocate for enhancing transparency and local control in how these funds are allocated to better support community needs such as education, public safety, and infrastructure [2][5].
Possible revisions to the SSUT rate or structure to more closely align with local sales tax frameworks that fund municipalities more effectively are also under discussion [2][5].
This debate reflects a broader national challenge in adapting online sales tax systems to fairly serve local jurisdictions, especially as e-commerce continues to grow. The Alabama Big 10 Mayors' call for change is seen as essential to balance support for local businesses, adequate funding for schools, and sustainable municipal budgets, ensuring the economic health of Alabama’s communities [2][4][5].
It's worth noting that many of the out-of-state online sellers don't have a physical presence in Alabama, and the current online tax system remits tax revenues to a state agency in Montgomery instead of the community where the purchase was made [2]. This, they argue, gives out-of-state, online sellers an unfair competitive advantage.
Every day the system continues in its current form, local schools, first responders, and communities are losing resources they depend on. Alabama law makes it less cost-effective for Alabamians to shop locally, a factor that the mayors believe must be addressed [2].
On Monday, the Alabama Big 10 Mayors released a statement about the need to fix the state's internet sales tax system. They have not specified whether they intend to address the issue through the courts or the legislature [6].
[1] Alabama Big 10 Mayors Call for Overhaul of Internet Sales Tax System. (2021). Retrieved from [https://www.al.com/news/2021/09/alabama-big-10-mayors-call-for-overhaul-of-internet-sales-tax-system.html]
[2] Alabama Big 10 Mayors Call for Reform of Internet Sales Tax. (2021). Retrieved from [https://www.wsfa.com/2021/09/13/alabama-big-10-mayors-call-for-reform-of-internet-sales-tax-system-to-help-local-businesses/]
[3] Alabama Big 10 Mayors Discuss Online Sales Tax. (2021). Retrieved from [https://www.wvtm13.com/article/alabama-big-10-mayors-discuss-online-sales-tax-system-at-meeting-in-tuscaloosa/36682634]
[4] Alabama Big 10 Mayors: Internet Sales Tax System Hurts Local Businesses. (2021). Retrieved from [https://www.alabamanewsnetwork.com/2021/09/alabama-big-10-mayors-internet-sales-tax-system-hurts-local-businesses/]
[5] Alabama Big 10 Mayors Seek Equity in Internet Sales Tax. (2021). Retrieved from [https://www.wvua23.com/news/local-news/alabama-big-10-mayors-seek-equity-in-internet-sales-tax-system/]
[6] Alabama Big 10 Mayors Urge Action on Internet Sales Tax. (2021). Retrieved from [https://www.wvtm13.com/article/alabama-big-10-mayors-urge-action-on-internet-sales-tax-system-to-help-local-businesses/36754038]
- The Alabama Big 10 Mayors are advocating for a reform in the state's internet sales tax system, citing concerns about its impact on city budgets, funding inequities for municipalities, schools, and small businesses.
- In the ongoing debate, the mayors argue that the current Simplified Sellers Use Tax (SSUT) system benefits large out-of-state corporations like Amazon and Walmart at the expense of small Alabama businesses and local authorities.
- The mayors propose solutions such as revising the tax distribution formula to ensure more equitable and direct allocation of internet sales tax revenue to the local governments where purchases are made, and enhancing transparency and local control in how the funds are allocated.
- A significant concern for the Alabama Big 10 Mayors is that many out-of-state online sellers lack a physical presence in Alabama, resulting in revenue remittances being sent to a state agency in Montgomery instead of the communities where purchases are made, giving out-of-state online sellers an unfair advantage.
