Sales tax needs adjustment

Published 12:00 am Monday, April 12, 2004

Ever so often, Jay Shows scrolls through the internet to view the history of a Marengo County sales tax bill in the Alabama Legislature. He still hasn’t found what he’s looking for; and he won’t.

Since March 16, when House Bill 634 received its first reading, Shows has monitored progress of the bill that will allow the Marengo County Commission to increase the sales tax by another 1 percent — and for good reason. As head of the Demopolis Area Chamber of Commerce and Industrial Development Board, Shows has a keen interest in how businesses and industries in the area will be affected by the bill.

As HB 634 progressed through Montgomery, State Rep. Thomas Jackson, D-Thomasville, indicated to an industrial leader in the area that he would place an amendment on the bill removing — or drastically reducing — the amount of sales tax car dealers and manufacturers would pay. Jackson did not return calls seeking comment.

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To Shows, such an amendment would have gone a long way toward helping industry recruitment and keeping county car dealers competitive.

As the current sales tax is structured, car dealers already pay as much sales tax as most counties in the area, and any increase in the auto tax would hurt dealers.

The amendment, according to Shows, was simply a confirmation that car dealers in Marengo County wouldn’t lose a competitive advantage with dealers in surrounding counties. So far, the confirmation has not come.

“I haven’t seen [the amendment] yet,” Shows said.

Shows, and anyone else looking for the amendment, won’t find it, either.

Max Joiner, chairman of the Marengo County Commission, said there was an attempt to place an amendment on HB 634, but the effort — which has stalled progress of the tax bill — was stopped after discussions between county officials and the local legislative delegation.

“We feel that it’s best for us to deal with our people on a local level, which also allows us a little more flexibility,” Joiner said. “Throughout this [sales tax] process, we have been privileged to have some real good communication, and [the car and manufacturing tax issue] has been resolved.”

Woody Dinning Jr., attorney for the Marengo County Commission, explained that placing an amendment on the sales tax bill wasn’t necessary for commissioners to limit the amount of sales tax car dealers and manufacturers pay.

“That bill just creates a ceiling of how much the commission can tax,” Dinning said. “The actual tax isn’t levied until the commission passes an ordinance, and in that ordinance, they can tax any way they want.”

A good example is the 1995 ordinance levying a sales tax for construction of a new jail. While the local legislation accompanying that tax allowed for a 1-cent ceiling, the commission only taxed car dealers and manufacturers one-half of a cent.

Along with Joiner, commission members Ken Tucker and Freddie Armstead declined to comment on the specifics of the sales tax. They all indicated a need to address the car dealer and manufacturer tax, but said it was not appropriate to talk about specifics just yet.

“We don’t meet in private. It’s against the Sunshine Law,” Armstead said. “I know what’s going to happen, but let’s just wait and see.”

Tucker, concerned that fairness be considered among all businesses, did say he was concerned about placing car dealers and manufacturers at a disadvantage.

“I’m a business-oriented person, but I also think we have to look at the other side of this thing,” he said. “There are a lot of businesses that have to pay this tax, and we need to be cognitive of their concerns. We have to balance those considerations.”

Joiner agreed with Tucker’s position of fairness and said the commission should work hard to levy a tax that is fair to all who pay.

“We’re never out to penalize anyone, including manufacturers and car dealers,” he said. “But if we’re going to treat one sector one way, we can’t treat another group another way.”

According to Joiner, there was an attempt to place an amendment on the sales tax bill, but in the end, the commission chair said all involved in the process — including those who will pay the tax — are satisfied with the arrangement between government and businesses.

“It’s a very, very fair agreement,” he said.

Patrick Baugh, owner of Baugh Chevrolet and Baugh Ford, said the commission already has a precedent based on the jail tax.

“I know what they’re going to do,” he said. “They’re going to tax us half a cent. And that’s still going to hurt us.”

If a person has to pay an extra one-cent sales tax on a $30,000 car, that means a price increase of $300, Baugh said.

“With half a cent, that’s still another $150 a car,” he said. “People already have the preconceived notion that they need to go out of town to buy a car because they’ll get a better deal. And even though that’s not true, this isn’t going to help.”

Joiner could not indicate when the tax bill would pass through the Alabama Senate. The commission meets again on Tuesday, April 13, at 9 a.m.