Fairness, loopholes at issue

Published 12:00 am Tuesday, December 4, 2001

Staff Writer

Legislators are scheduled to open a special session tonight, but on Monday most were still wondering what is on the agenda.

Gov. Don Siegelman is calling what is the fourth special session this year to "close loopholes" in Alabama’s tax structure.

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The governor has said he wants to focus on making changes in corporate income taxes in an effort to prevent more cuts to education.

In February, Siegelman called proration to the Education Trust Fund, cutting funding for the 2000-2001 academic year by 6.2 percent because tax collections were not as high as expected. Those cuts to state-funded schools came to about $266 million.

Now, officials are anticipating tax collections for this year will be $30 million short. Predictions are the cuts will fall to $150 million from the expected $180 million that was supposed to fund the $4 billion education budget.

Siegelman has said he wants to "close loopholes" in the state’s corporate tax rate, which allow some companies to avoid paying taxes.

Lowell Barron, president pro tempore of the Alabama Senate, said schools are hurting because "our unstable tax system is heavily dependent on sales taxes and income taxes" which are seeing decreases because of a national recession.

"As the Legislature convenes in Montgomery in special session to resolve the school-funding shortfall, we must bring people together to resolve this critical issue to our state," Barron said.

He said it is "simply unfair and inaccurate" to blame the business community for the funding problems.

"This problem is the result of a bad economy and an unstable tax system ­ nothing more and nothing less. If there are loopholes that are being abused in our current tax system, they need to be closed."

Barron also praised State Sen. Wendell Mitchell, D-Luverne, for providing "strong leadership" on a number of important issues. "He understands that you want goverment to solve problems, not create problems, and he has been instrumental in our success over the past three years."

The governor wants to raise the business privilege tax on the new worth of large companies in the upcoming special session.

Mitchell said it is his understanding "the governor wants to raise $150-160 million to defray costs of education for the next fiscal year. If that is the premise for this special session, I would hope the governor would have a plan that would respond to that in a fair way."

Mitchell was able to get his hands on the bills late Monday, but had not had a chance to review them.

State Rep. Alan Boothe, D-Troy, still had not seen the paperwork Monday afternoon.

Although he had not read about any of the reasons or ways to close the "loopholes," Boothe said, "fairness should be the answer.

"I don’t think we need to tax anyone unfairly. What we need to do is take a good look it and that’s what I intend to do."

If the governor believes there are loopholes in the tax laws, Mitchell said they obviously were not caught the last time legislation was introduced.

"If history tells us one thing, we need to look at the content of this bill," Mitchell said. "Based on that lesson, we should read this legislation carefully."