HB3 By Representative Holmes RFD Fiscal Responsibility Rd 1 04-FEB-20

SYNOPSIS: This bill would propose an amendment to the Constitution of Alabama of 1901, entitled the Alabama Economic Freedom Act of 2019, to repeal the following: Amendment 25 of the Constitution of Alabama of 1901, now appearing as Section 211.01 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, Amendment 23 of the Constitution of Alabama of 1901, now appearing as Section 219 of the Official Recompilation of the Constitution of Alabama of 1901 as amended, Amendment 212, as amended by Amendment 662, of the Constitution of Alabama of 1901, now appearing as Section 211.03 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, and Amendment 225 of the Constitution of Alabama of 1901, now appearing as Section 211.04 of the Official Recompilation of the Constitution of Alabama of 1901, as amended; to eliminate the business privilege, inheritance and estate and income taxes and to authorize the Legislature to enact general laws to implement the amendment.

A BILL TO BE ENTITLED AN ACT

To propose an amendment to the Constitution of Alabama of 1901, to repeal the following: Amendment 25 of the Constitution of Alabama of 1901, now appearing as Section 211.01 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, Section 229, now appearing as Section 229 of the Official Recompilation of the Constitution of 1901, as last amended by Amendment 872 of the Constitution of Alabama of 1901; Amendment 23 of the Constitution of Alabama of 1901, now appearing as Section 219 of the Official Recompilation of the Constitution of Alabama of 1901, as amended; Amendment 212, as amended by Amendment 662, of the Constitution of Alabama of 1901, now appearing as Section 211.03 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, and Amendment 225 of the Constitution of Alabama of 1901, now appearing as Section 211.04 of the Official Recompilation of the Constitution of Alabama of 1901, as amended; to eliminate the business privilege, inheritance and estate taxes and income taxes and to authorize the Legislature to enact general laws to implement the amendment.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:Section 1. The following amendment to the Constitution of Alabama of 1901, as amended, is proposed and shall become valid as a part thereof when approved by a majority of the qualified electors voting thereon and in accordance with Sections 284, 285, and 287 of the Constitution of Alabama of 1901, as amended:

PROPOSED AMENDMENT

I. This amendment shall be known and may be cited as the Alabama Economic Freedom Act of 2019.

II. Effective January 1, 2020, the following provisions of the Constitution of Alabama of 1901 are repealed:

(a) Section 229 of the Constitution of Alabama of 1901, now appearing as Section 229 of the Official Recompilation of the Constitution of Alabama of 1901, as amended by Amendment 872, relating to business privilege taxes.

(b) Amendment 23 of the Constitution of Alabama of 1901, now appearing as Section 219 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, relating to inheritance and estate taxes.

(c) Amendment 25 of the Constitution of Alabama of 1901, now appearing as Section 219 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, related to income taxes.

(d) Amendment 212, as amended by Amendment 662, of the Constitution of Alabama of 1901, now appearing as Section 211.03 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, relating to state tax on net income of corporations.

(e) Amendment 225 of the Constitution of Alabama of 1901, now appearing as Section 211.04 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, relating to deductions of federal income tax from gross income.

IV. The Legislature shall enact general laws as necessary to implement a single rate consumption tax in Alabama. These laws shall include provisions to repeal the current state sales an use taxes, rental and lease taxes, lodgings tax, utility gross receipts tax, corporate tax income tax, individual income tax, mortgage and deed taxes, financial institutions excise tax, business privilege tax and insurance premium tax and replace all revenue generated from these taxes with a broad-based single rate tax based on consumption expenditures contributing to Alabama's Gross Domestic Product (GDP). The single rate consumption tax rate shall also replace state tax revenues allocated to local governments as well as levied tax revenues which are collected using the same basis as the current state taxes.

Section 2. An election upon the proposed amendment shall be held at the next statewide primary or general election in accordance with Sections 284 and 285 of the Constitution of Alabama of 1901, now appearing as Sections 284 and 285 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, and the election laws of this state.

Section 3. The appropriate election official shall assign a ballot number for the proposed constitutional amendment on the election ballot and shall set forth the following description of the substance or subject matter of the proposed constitutional amendment:

"Proposing an amendment to the Constitution of Alabama of 1901, entitled the Alabama Economic Freedom Act of 2019, to repeal business privilege taxes, income taxes and inheritance and estate taxes; and to authorize the Legislature to enact general laws to repeal various state taxes currently levied and establish a broad-based single rate tax on consumption expenditures contributing to Alabama's Gross Domestic Product (GDP) to replace the revenues generated from the repealed taxes and companion local taxes.

"Proposed by Act ________."

This description shall be followed by the following language:

"Yes ( ) No ( )."

Constitutional Amendments

Taxation

Income Tax

Revenue Department

Legislative Fiscal Office

Finance Director

Elections