What revenue from gas, grocery tax goes toward; what could happen if suspended

Many Alabamians are hoping for a pause on grocery and gas taxes.
Published: Mar. 28, 2022 at 10:10 PM CDT
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HUNTSVILLE, Ala. (WAFF) -Things financially are a bit tighter for all of us, especially when it comes to a trip to the grocery store or the gas station.

That’s why many hope state lawmakers will pause taxes on both, and it’s even being used to sway voters in campaign ads too.

Alabama is only one of 13 states that collect grocery tax.

But that money helps fund education. About $500 million each year come from grocery tax, which is why many believe it’s not going anywhere unless there’s another revenue stream to replace those missing millions.

“I could certainly use any help and if the state was willing to suspend some of the taxes for our groceries, especially being a single mom with a special needs child, it certainly would help our budget a whole lot,” Tammy Moore said.

Tammy Moore is on a very tight budget.

At the grocery store, “I spend anywhere from $150 to $200 and that’s being very budgeted,” she said.

And she like other Alabamians are taxed 4% on food purchases for state grocery tax.

Moore, a former teacher herself wishes the tax would be put on pause.

“A temporary solution may be just what we all need to get back on the upside of feeling a little bit more secure in our day to day lives.”

Michael Hellton wants to see the grocery tax go away all together.

“If the other states make it work without that and they still do well on education then how come Alabama can’t be part of that,” Hellton said.

But Alabama is also among the handful of states without a lottery.

Something Calhoun Community College Political Science Professor Waymon Burke says could replace the $500 million the grocery tax generates.

“It would be very difficult to pass until there is an alternative source of revenue. Because education, the 6 or 7 billion dollars that it is could not take a $500 million hit and still function as well as it does now,” Burke said.

Meanwhile, some Alabamians are hopeful state lawmakers move to suspend the state’s gas tax. And with this being an election year, it’s been an easy punch line.

Drivers pay the 28 cents per gallon, with the majority of that money funding Alabama road projects, about 67%.

Triple A spokesman Clay Ingram says if that tax was suspended...

“What that means is gas stations don’t have to pay that 28 cents per gallon to the state on the gas that they sell. Does that mean they’re going to drop their prices 28 cents per gallon for the motorists? Probably not,” Ingram said.

A bill was introduced this session to remove the grocery tax, but it hasn’t made it out of the house committee.

Just last week Governor Lee of Tennessee proposed suspending the grocery tax for 30 days.

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