The leadership of the Business Associations’ Tax Coalition (BATC), comprised of 30 trade and professional associations including ABA, was omitted from negotiations after a compromise had not been reached with the Administration and AEA on . Instead, leaders in the House GOP Caucus were called in and quickly cut a deal that links passage of this $67 million tax on business to that would provide an increase in the health insurance premium deduction for small business from 100 percent to 120 percent with future increases tied to revenue growth.
Following the supposed agreement, members of the Black Caucus took to the microphone in their attempts to stall further proceedings citing several reasons:
- Their omission from negotiations; and
- More importantly, they want to link the bill eliminating the state tax on groceries and removing the federal income tax exemption to this package as well. They are also asking that Governor Riley remove his objection to that issue.
Obviously, things are very fluid as to the two tax bills and the increase in premium deduction as they relate to passage of the education budget or anything else for that matter.
HB 350 was introduced to codify a recent Alabama Court of Civil Appeals interpretation of a 2001 corporate tax law (add-back statute) that continues to be the subject of litigation. A number of versions of the bill have been floated with some including language taxing captive Real Estate Investment Trusts (REITs) that would impact banks. The version that the House leadership would like to pass contains language taxing corporate-owned captive REITs but .
HB 350, which is supported by Governor Riley and AEA, generates $67 million in new revenue and would make virtually all fifty-something tax refund cases moot avoiding $100 plus million in potential revenue loss to the Education Trust Fund. The Alabama Supreme Court has agreed to hear the appeal of the Vanity Fair case from which this issue arose. Should they agree with the lower Court, the refund cases the bill addresses are cured. Should they overturn the lower court, the impact of refunds becomes a very likely possibility.
The biggest issue for BATC is that the bill would change tax law for any corporate taxpayer with an open tax year (defined as a year for which the taxes have not been paid or are under appeal) making the bill retroactive.
We keep hearing that an up or down vote on this bill is imminent but it never happens. Many are saying that while there are some really interested in the passage and failure of this local gambling bill, more are concerned with avoiding other issues such as immigration and coastal insurance to name a few.
—Last week, the House passed HB 274 by Rep. John Knight (D-Montgomery) that would remove the state's 4-percent sales tax on groceries, end Alabama's state income tax deduction for federal income taxes paid and increase individual income tax standard deductions as well as personal and dependent exemptions. This week, that very same bill was approved by a Senate committee and now awaits final passage by the full Senate.
The Legislative Fiscal Office estimates this constitutional amendment (would have to be approved by voters if passed by both houses) would reduce sales tax collections by $320 million annually and raise income tax collections by $345 million. About 20-percent of Alabama's families would pay more taxes under the proposal, the sponsors say.
by Rep. Mike Hill (R-Columbiana), the Banking Department’s Alabama Mortgage Act, which essentially provides for the licensing and registration of mortgage brokers, and also by Rep. Hill , which removes mortgage lending from the Consumer Credit Act and the Mini Code as well as alter the licensing provisions, were given favorable reports by the House Banking and Insurance Committee Wednesday. Banks are exempt from the bills.
The Alabama Bankers Association has submitted three bills for passage this session:
- - This bill restricts the use of lender information that is publicly available including loan numbers, amounts and trade names in solicitations for services or products without the consent of the lender. HOUSE PASSED THEIR VERSION OF THE BILL.
- - This bill codifies a Supreme Court decision that an assignee of a creditor may enforce a lost note just as the creditor could. Both bills are out of the banking committees in their house of origin.
- - Currently, all property is subject to a one-year right of redemption to the owner. This bill removes that the redemption period for commercial property. The Senate Banking and Insurance Committee substituted a version of HB 338 by Rep. Ford (D-Gadsden) for Sen. Griffith’s bill this week. SB 267 now reduces the right of redemption on commercial and residential property to six months. We will now push the Griffith and Ford bills. ABA is working with Rep. Buskey and members of the Black Caucus to address their concerns.
H.R. 5519 the Credit Union Regulatory Relief Act of 2008 is likely to come to a vote on the House floor as early as Tuesday, April 29. The misnamed legislation would permit a huge expansion of the geographic reach, commercial lending authority, and product offerings for all tax exempt credit unions.
It is very important to the industry that we generate a massive grassroots effort on H.R. 5519. If Members of Congress do not believe that the banking industry has grassroots muscle, some will try to push CURIA through the House of Representatives.
- Contact Members of the House of Representatives and urge them to oppose H.R. 5519 because it is a major expansion of the credit union charter that was never voted on in the House Financial Services Committee.
- Members of the House of Representatives can be reached through the U.S. Capitol switchboard at 202-224-3121. Or, contact information can be found for Members on the House website (www.house.gov).
- Go to www.alabamabankers.org and click on the icon which will take you to advocacy page to generate a letter to your member of Congress.
- NCUA has already allowed certain credit unions to add 641 entire cities, counties, and other areas to their fields of membership, claiming they constitute “underserved” communities. (Note: a successful ABA lawsuit has prevented NCUA from permitting all credit unions to expand into these cities.) These underserved approvals include the entire cities of Washington, D.C., Houston, and Philadelphia, among others. Despite claiming to be about “underserved” areas, the language of H.R. 5519 allows all credit unions to enter these cities and permit broad areas of other cities to be made eligible for expansion as well. This legislation would give credit unions access to these geographic areas without any oversight to determine if loans or services are, in fact, reaching low-income residents.
- H.R. 5519 authorizes credit unions to offer short-term loans to non-members, supposedly as alternatives to payday lending. However, the language of the bill could and would be used to authorize credit unions to offer a wide array of consumer loans, such as credit cards, to non-members.
- Despite rhetoric about expanding lending in underserved areas, in reality this legislation vastly expands credit unions’ commercial lending authority by exempting from the commercial lending cap loans any business operating within these areas designated as underserved. For example, if a national retailer operates a store in Washington, D.C., as many do, credit unions may lend to that retailer without having such a loan counted under their commercial lending cap.
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