LITTLE ROCK, Ark. — An Arkansas lawmaker says the Legislature’s tax overhaul task force is looking to determine which of the state’s sales-tax exemptions should be kept and which should be abandoned.
PFM Consulting Group presented a report to the task force Tuesday with 7-year-old state estimates of financial impact of the exemptions, the Arkansas Democrat-Gazette reported. The estimates were cited from the state Department of Finance and Administration.
The report says that more than 100 sales-tax exemptions reduced revenue by $1.4 billion in fiscal 2011. The highest exemptions from that year were for gasoline or motor fuel on which gas or fuel tax had been paid, which cost the state $325 million, and food and food ingredients, which cost it $176 million.
The report also says Arkansas collected $3.3 billion in sales tax for fiscal 2017, which ended in June.
“The first thing we need to do is to establish which of these exemptions are off the tables because … of federal law or the constitution or because they clearly impact the policy to make us immediately not competitive,” said task force co-chairman Republican Sen. Jim Hendren.
Hendren has asked finance department officials to create “a hypothetical” proposal for cutting the top income tax rate if the state had no sales tax exemptions.
“I just want folks to understand the math of exemptions to a … top end (individual income tax) rate,” Hendren said.
Information from: Arkansas Democrat-Gazette, http://www.arkansasonline.com