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SUNDAY, JULY 2, 2006

Over 120 counties, cities join Alabama for tax-free holiday

By Phillip Rawls
Associated Press Writer

MONTGOMERY — Alabama's first sales tax holiday weekend for back-to-school purchases is growing in popularity, with more than 120 cities and counties agreeing to join the state in waiving taxes the first weekend in August.

Officials expect more cities and counties to join before the deadline for signing up expires Wednesday.

State Rep. Mac Gipson, who sponsored the legislation creating the tax-free weekend, said he's pleased with the participation. He said once a few city councils and county commissions passed resolutions to participate, competitive pressure prompted others to follow.

"They did it to keep their people from going over there to shop," Gipson, R-Prattville, said.

Sonny Brasfield, assistant executive director of the Association of County Commissions of Alabama, said several county commissions have scheduled special meetings Monday and Wednesday to vote.

Shoppers — even those without school-age children — will get to make their tax-free purchases Aug. 4-6.

Gipson's legislation waives the state's 4 percent sales tax throughout the state. It also allows city councils and county commissions to vote by Wednesday whether to remove their local sales.

The sales tax waiver will apply to:

  • Clothing costing up to $100 per item.
  • Computers, software or computer supplies costing up to $750 per item.
  • School supplies, including art supplies, and textbooks up to $50 per item.
  • Other books up to $30 each.

    The Alabama Retail Association worked with Gipson to get the Legislature to approve the sales tax holiday. Association President Rick Brown said that based on the experience of Florida, which has had a holiday since 1998, Alabama shoppers can expect many retailers to have special sales and some will likely extend their hours — much like the after-Thanksgiving sales weekend.

    To help merchants prepare for the weekend and understand the rules, the state Revenue Department and two business groups will present seminars throughout the state during July. The Revenue Department will also have a hot line to answer merchants' last-minute questions.

    There are some questions already anticipated:

  • If an item of clothing costs $120, is the first $100 tax free? No.
  • If a store marks down an item of clothing from $120 to $90, is it tax free? Yes.

    The Legislative Fiscal Office estimated the first weekend will reduce the state's sales tax collections by $3.3 million.

    Gipson doesn't expect that much because he says shoppers will make impulse purchases that aren't exempted.

    Brasfield expects impulse purchases too, but he said most impulse items, such as clothes, will be exempted from the tax.

    Brown says it's hard to measure the impact because Alabama shoppers who've been going to Florida and Georgia to participate in their tax-free holidays will now be making their purchases at home.

    Tennessee is starting a tax-free weekend the same time as Alabama, but Mississippi doesn't have one. Brown expects some Mississippi citizens to cross the state line to spend money in Alabama.

    State Revenue Commissioner Tom Surtees expects some impact, but not much.

    "Will there be a little dip? Yes, but in the long run I don't think it will be significant. It will be a positive impact for families," he said.

    Gov. Bob Riley said he'd like to have 100 percent of Alabama's cities and counties participating, but he's pleased with the number that have signed up for the first year.

    Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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