The Alabama Senate on Thursday debated but did not vote on a bill to prohibit the state and local governments from taxing the convenience fees applied when people use credit or debit cards to make purchases.
Sponsor Sen. Arthur Orr, R-Decatur, 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.
For example, if someone buys an item for $10, a 3% convenience fee could be charged. Customers could then be taxed on that $10.30 rather than the original $10.
“This bill says you can tax the $10, but not the 30 cents,” Orr said on the Senate floor.
A fiscal note on Senate Bill 221 says it would decrease revenue to the Education Trust Fund and county and municipal funds by an undetermined amount.
Sen. Rodger Smitherman, D-Birmingham, said on the Senate floor that the bill would financially hurt municipalities, including those trying to increase their police forces. A different bill pending in a Senate committee would allow the state to take over operations of the Montgomery Police Department if it doesn’t increase police staffing within five years.
“I got calls from my cities saying it’s going to put holes in our revenue,” Smitherman said.
He said on the Senate floor he’d like all cities in Jefferson County removed from the bill and had an amendment to exclude Birmingham from the provision.
Before the body could vote on the amendment or bill, Orr requested the legislation be carried over, meaning it could be brought back to the floor at a later date, to give him time to work with Smitherman on his concerns.
Orr later told Alabama Daily News he expected the bill to be back for a vote soon.