Leaders from Alabama’s ten largest cities are concerned about missing out on a fair share of online sales tax revenues.
Understanding the Simplified Sellers Use Tax (SSUT)
The statewide online sales tax rate is 8%, which is lower than the 9% charged in many North Alabama cities for in-store purchases. Cities like Huntsville and Madison feel this creates a revenue gap. The Simplified Sellers Use Tax (SSUT) program, designed to simplify online tax collection, is now under scrutiny by city leaders who want the baseline rate adjusted to match local taxes.
Alabama House Speaker Rex Reynolds emphasized the importance of the SSUT program. He called it a vital revenue source for the state’s general fund. “We cannot change the law without carefully considering unintended consequences,” Reynolds said. He added that thorough analysis and legal research must guide any updates.
Mayors advocate for fair revenue distribution
Madison Mayor Paul Finley is one of the ten mayors pushing for changes to the SSUT formula. He highlighted the growing impact of online shopping on municipal revenues. Finley stressed the need to ensure all cities benefit fairly from internet sales. “We want fairness for all municipalities, not just the big ten cities,” he said. “Online shopping will only grow, so we must prepare for that.”
Potential benefits for municipalities and small businesses
In 2024, Madison earned over $4 million from online sales taxes. Finley believes matching the online tax rate to the city’s rate could increase funding for critical needs. He mentioned fire trucks, police protection, and road improvements as potential uses. “We’re not taking money from anyone,” he said. “We just want to update a system created in 2016.”
Finley also pointed out that the change could help small businesses. Aligning the rates would give these businesses more resources, promoting growth across municipalities.
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