The City of Tuscaloosa, Tuscaloosa City Schools and dozens of other larger cities in the state recently dropped their lawsuit over online sales tax distribution against the state in favor of negotiations. Now comes Senate Bill 221 that would decrease revenue to the Education Trust Fund (ETF) and county and municipal funds by an undetermined amount of money.
The bill would prohibit state and local governments from taxing the convenience fees applied when people use credit or debit cards to make purchases. It sparked extensive debate in the Alabama Senate Thursday, leading to no vote being taken, for now.
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Decatur Sen. Arthur Orr (R-3) explained that there is nothing in current law prohibiting or addressing whether the state, counties and cities can apply sales and use tax to the fee charged by merchants when customers pay by card. His bill would specify that applying such a sales and use tax would be illegal.
Birmingham Senator Rodger Smitherman (D-18) was quick to tell the senate he had been receiving calls from cities telling him the legislation would, “put holes in our revenue.”…