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Legislature passes bill to make airports tax exempt

The legislation clarifies that commercial airports are exempt from paying sales and use taxes.

A view out the window of a terminal in Mobile Downtown Airport. (VIA MOBILE AIRPORT AUTHORITY)

The Alabama House of Representatives Thursday passed a bill that would exempt airports from sales and use taxation.

Senate Bill 11 is sponsored by Sen. Sam Givhan, R-Huntsville. The legislation was carried on the House floor by state Rep. Rex Reynolds, R-Decatur.

Reynolds explained that airports had long been tax-exempt, but an administrative error had resulted in the airports potentially losing that tax exemption. This legislation corrects that.

Reynolds asked the body to accept an amendment by the House Ways & Means Education Committee to make this bill exactly like the version that the House had already passed.

When the bill was being considered by the Senate Finance and Taxation Education Committee, Givhan said that historically airport authorities have been tax-exempt; however, “a new interpretation of the law says that airport authority are not exempt from taxes.”

“They are creatures of the state,” Givhan said. “I am trying to restore where they were before this reinterpretation.”

According to the bill synopsis:

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“Under current law, airport authorities are exempt from certain taxes. Also under current law, certain governmental entities that are otherwise sales and use tax exempt may be issued certificates of exemption from sales and use taxes on certain projects. A sales and use tax exemption certificate may be issued to certain contractors and subcontractors working on these projects. Also under current law, certain governmental entities that are otherwise exempt from sales, use, or lodgings tax are required to annually obtain a certificate of exemption. This bill would exempt airport authorities from paying sales and use taxes. Also, this bill would include airport authorities in the list of governmental entities that may be issued a certificate of exemption from sales and use taxes on certain projects and in the list of governmental entities that shall obtain an annual certificate of exemption.”

For-profit businesses have to pay sales and use taxes. Governments do not. Nonprofit corporations are a mixed bag in Alabama. Some do have to pay sales and use taxes, while many have gotten tax exemptions from the Legislature over the years. This clarifies that airport authorities are set up as government entities and should be treated the same for taxation purposes.

The House voted in favor of SB11 on a 96 to 0 vote.

Thursday’s vote meant that the bill has been passed by both houses of the Alabama Legislature and can now go on to the desk of Alabama Gov. Kay Ivey for her consideration.

Thursday was day 23 of the 2021 Legislative Session.

Brandon Moseley is a former reporter at the Alabama Political Reporter.

DIG DEEPER

Legislature

Arnold has served in executive assistant and committee clerk roles during her tenure in the Alabama House.

Legislature

The Rainsville native has served in the House since 2014 and as majority leader since 2017.

Elections

Manufacture Alabama, on Tuesday, said they were “proud" to support Givhan for re-election.

Elections

The National Federation of Independent Business Alabama PAC has endorsed 17 candidates for seats in the Alabama Legislature.