State Rep. Holmes Prefiles Bill To Replace Alabama’s Income,Sales Tax System With ‘Fair Tax’

State Rep. Mike Holmes (R-Wetumpka) on Monday announced that he has prefiled legislation for the 2020 regular session that would eliminate Alabama’s traditional income tax and sales tax system and replace it with a “FAIR Tax” system based on consumption.

Holmes’ bill, known as the “Alabama Economic Freedom Act", would repeal current state income and state, county and municipal sales tax levies, replacing all with a straightforward 8.03% tax rate on every purchase of new products and services.  The new tax would be collected by merchants at the point of sale.

“For too long, Alabamians have been burdened by a tax system that picks winners and losers in a never-ending maze of tax exemptions, deductions, and credits,” Holmes said in a statement.  “A system that is fair treats everyone identically by taxing them at the same rate when buying new goods or purchasing services.”