Smoke screen effect - Any tax on business will be automatically passed down to the consumer.
Riley's plan, outlined below, seems fair to poor people but in reality will significantly increase taxes on the
poor. Remember, businesses do NOT pay taxes - consumers pay taxes.
| Riley's reform proposals under attack By Mike Cason Montgomery Advertiser The timber industry, farmers and insurance companies spoke out against Gov. Bob Riley's $1.2 billion tax and reform package Tuesday. The governor also worked to quiet doubts about his announced college scholarship plan hours after his finance director, Drayton Nabers, said it was dropped from the package. Riley said he is not backing off the scholarships. "We're taking our time to put together a bill that we have a tremendous amount of confidence in," Riley said. "Regardless, this is going to be one of the centerpieces of the whole package that people will vote on." Riley said he and his staff are working with lawmakers to decide on the academic benchmarks that would determine who would be eligible for scholarships. Riley's bill to gradually raise property taxes drew the most opposition during an all-day public hearing at the Alabama State House. The increases would amount to $425.8 million annually by 2008. Riley's plan also drew supporters to the hearing. Eighteen people spoke in favor of the bills and 13 spoke against them. Tracie West, 36, a mother of three and owner of a shipping business in Auburn, waited about eight hours to tell legislators she supported Riley's plan. "I'll pay several thousand dollars more. But I'd rather invest in Alabama than put that money in my pocket," West said. "I think the time is now to act and change the history and course of Alabama," West said. Jim Evans, pastor of Crosscreek Baptist Church in Pelham, said the Legislature and voters should support the plan in the spirit of Judeo-Christian values. Riley said his plan would lower state taxes on low-to-middle income households, and that about 65 percent of families would pay no more and some would pay less. Evans said pastors would help pass the September referendum in the same way some helped defeat the lottery proposal in 1999. "The same energy and effort that we put forward to stop the lottery will be put forward to get this tax package passed," Evans said. "I promise you that's what I intend to do if we can get it out there. It's the very least we can do if we're going to call ourselves people of faith." The Episcopal Diocese of Alabama, United Methodist Church North Alabama Conference, United Methodist Alabama-West Florida Conference, and the Alabama Baptist Convention passed a resolution on Jan. 10, 2002, in support of tax reform which read: "The governor and the state Legislature are called upon by the Christian denominations to take action to enact a fair and just tax structure for Alabama." Opponents were equally passionate. Tommy Maples drove 200 miles from Elkmont to tell legislators that he could not afford what he expects would be at least a four-fold increase in his property tax. Maples owns an 800-acre cattle farm. "The perception that just because you've got land you're rich, that's just not true," Maples said. Maples said he might have to sell his land because of the tax increase. "My family has been on that land since 1815," Maples said. Two House budget committees could approve some of the bills today, which would put them in line for a vote by the full House membership on Thursday. The Senate will conduct hearings today on 10 reform bills that Riley said will put better teachers in classrooms, control the rising cost of public employees' benefits and ensure more accountability in government. If the Legislature approves Riley's bills they would go to the voters in the form of a single ballot referendum in September. The plan is intended to close what Riley said is a $675 million budget deficit for next year and make improvements to schools and other state services. Boyd Kelly, lobbyist for the Alabama Forestry Association, which represents timber companies and other components of the forestry industry, said Riley's tax proposal was too large, contained too little accountability, added new programs in a time of economic stress and unfairly singled out agricultural and farm property. "Under the proposed bill, homeowners will see annual increases in the range of 50 percent to 100 percent, while farmers will see their land taxes increased between 250 percent and 350 percent," Kelly said. Currently, agricultural property is tax based on 10 percent of its value. That value is based on current use, rather than market value. Riley's proposal would tax all property at 100 percent of current use value and would raise the per-acreage values for timber and agricultural land. Those increases partially would be offset by lowering the state tax rate from 6.5 mills to 3.5 mills. Riley's property tax bill also raises the homestead exemption to shield the first $50,000 in value of a home from property tax, up from $40,000, and creates a new "farmstead" exemption to provide a tax break for small farm owners. Kimble Forrister, state coordinator of Alabama Arise, a coalition of religious and community groups that advocates for low-income families, spoke in favor of Riley's plan. Forrister said Riley's income tax reforms would more than offset property tax increases for low-to-middle income families. Ryan DeGraffenried, a lobbyist who represents Alfa and State Farm insurance companies, spoke against a bill that would increase insurance premium taxes by $5.2 million annually. DeGraffenried said the bill eliminates a tax break that has encouraged State Farm and Alfa to build offices in Alabama and create jobs. "We think it sends the wrong economic message to insurance companies," DeGraffenried said. |
IMPACT OF INCREASES How Gov. Bob Riley's state property tax plan would affect homeowners: Drop the state tax from $6.50 annually to zero on a $50,000 house Increase the tax $93 a year on an $85,000 house, which is the average home price in Alabama Increase the tax $136 a year on a $100,000 house Increase the tax $421 a year on a $200,000 home How the governor's income tax plan would affect families: Cut as much as $600 for a single mother who makes $35,000 a year and has three children Cut as much as $150 for a married couple with two children and a $70,000 income Increase as much $940 a year for a married couple with two children and a $150,000 income Source: The Associated Press |