Online Sales, Local Losses: Why Alabama’s Tax System Needs a Fix

In the age of Amazon and one-click shopping, cities across Alabama are facing an invisible but growing challenge: losing out on critical sales tax revenue.

Thanks to the Simplified Sellers Use Tax (SSUT)—a system created by the state to collect online sales tax from remote sellers Alabama has been able to generate revenue from e-commerce. That’s a good thing. But the way the SSUT is structured is creating unintended consequences for fast-growing, retail-driven cities like Madison.

What’s the Problem?

Under SSUT, all online purchases from out-of-state sellers are taxed at a flat 8% rate. That money is then split: half goes to the state, and half is distributed to local governments based on population, not where the purchase was delivered.

That means whether you live in District 6 or downtown Madison, your online tax dollars aren’t necessarily coming back to your city. And because in-person local purchases are taxed at a higher rate usually 9% or more, brick-and-mortar businesses are put at a disadvantage.

How Much Is Madison Losing?

If online sales to Madison residents were taxed at the same 9% rate as local businesses, the city could generate an estimated $400,000 more per year just from SSUT collections. That’s money that could go to roads, public safety, parks, and greenways.

We’re not talking about taxing people more, we’re talking about making the system fairer and more reflective of where the dollars are actually being spent.

Why Reform Matters

Cities like Madison are growing fast. We’re investing in infrastructure, attracting new families, and supporting strong schools and services. But to sustain that growth, we need a revenue model that reflects modern consumer behavior.

The SSUT system needs reform either to allow cities more control over their share or to align rates with brick-and-mortar standards.

This isn’t about politics, it’s about fairness, local control, and ensuring that cities like Madison aren’t punished for their success.

I support SSUT reform because I believe in smart growth, fair competition, and a future where Madison keeps more of what it earns.

Let’s fix what’s broken, so we can fund what matters.