City joins state in tax holiday

Published 12:00 am Monday, May 8, 2006

The first weekend in August will be a bargain bonanza for back-to-school shoppers, as Demopolis joined the state of Alabama Thursday in making Aug. 4-6 a holiday from sales taxes.

The Demopolis City Council voted unanimously to exempt shoppers from the city’s 3 percent sales tax on a variety of items needed as students return to school.

“I think our citizens will be very happy about this,” Councilman Thomas Moore said after the unanimous vote went on the books.

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Gov. Bob Riley signed the bill to waive the state’s 4 percent sales tax last week.

“Not only does it help families stretch their budgets further, it also helps our economy, said Riley, who signed the bill in the school supplies aisle of a Montgomery Target store.

The legislation, sponsored by Rep. Mac Gipson of Prattville and Sen. Zeb Little of Cullman, waives sales taxes on:

n clothing costing up to $100 per item,

n computers, software and computer supplies costing up to $750 per item,

n school supplies and textbooks costing up to $50 per item

n other books costing up to $30 per item.

Councilman Jack Cooley made the motion to adopt a resolution joining the state in the sales tax holiday. Moore seconded, and the council approved the resolution unanimously with very little discussion.

The Legislative Fiscal Office predicts the new law will reduce the state’s sales tax collections – and save shoppers – $3.3 million annually. The impact is not greater because shoppers often buy items other than back-to-school supplies that still have the sales tax levied on them.

No data was not presented on the effects of removing Demopolis’ 3 percent levy.

To make up part of the lost taxes, the Legislature approved a bill requiring companies that have contracts with the state for any type of supplies to start charging state and local taxes on their sales to Alabama consumers.

Legislative fiscal experts said the biggest impact would be on Alabama consumers who aren’t paying sales taxes now on computer equipment ordered through the Internet or catalogues, provided those computer companies have contracts with the state.

The Legislative Fiscal Office estimates the legislation will generate $1 million annually for the state and $1 million for cities and counties.

Check Saturday’s edition of The Times for the other action taken by the Demopolis City Council Thursday night.

– Information from The Associated Press was used in this report.