When the mayors of Alabama’s 10 largest cities met recently on policy issues they want to push in the Legislature, a fairer share of sales taxes from the internet was one focus of attention.
The mayors met in Hoover, and their huddle on this and other issues was reported by the Hoover Sun.
At issue was the straightforward way the state divides sales tax collected from internet sales. Companies pay the state a 4 percent sales tax and the state splits it with cities and counties based on their population.
This simple formula, said the mayors, did not account for the larger percentage of transactions that take place in big cities, nor the fact that the 40 percent of transactions that are business-to-business sales are more likely to take place in big cities.
The mayors discussed Texas’ formula for sharing internet revenue, aiming to craft legislation in Alabama, Hoover Mayor Frank Brocato told the Sun.
The mayors also want the proposed legislation to account for the fact that cities can have different rates of sales tax, making them more dependent on that source of revenue. Sales taxes are especially critical to cities because of provisions in the Alabama Constitution that make it difficult for them to raise local taxes on real estate.
City of Mobile Finance Director Paul Wesch told the Sun that some Alabama cities receive as much as 70 percent of their revenue from sales taxes.