Bill aims to earmark sales tax from Amazon

Last week, Amazon announced it planned to voluntarily collect sales tax in Arkansas starting in March. Now, a bill filed in the House seeks to dedicate that revenue to reducing income tax.

Rep. Andy Davis (R-Little Rock), the lead sponsor of the bill, said, “This was the quickest way to get something out there to demonstrate to my voters and to other members’ voters that our intention is to reduce income taxes if out-of-state internet retailers begin to pay the state sales taxes.

“Most taxpayers don't mind paying taxes when they know what they're getting for their money, but when they start paying a lot of taxes, and they don't know what they're going to get for it, they don't like that."

House Bill 1512 would expand an 2015 act that was largely hypothetical at the time it was passed. In anticipation of Congress passing a law requiring out-of-state sellers to collect sales and use tax, the 2015 Arkansas law calls for online sales and use tax revenue above $70 million to be used for income tax reduction. Federal law does not require out-of-state online sellers to collect sales tax.

Davis said the 2015 bill’s lead sponsor, former Rep. Kelley Linck, wanted to encourage Congress to pass internet sales tax legislation by demonstrating that, if it did, states would use the increased revenue to reduce income tax.

Davis’s bill expands the law to include sales tax collected because of state law requirements in addition to federal law. Two separate bills requiring the collection of sales tax from out-of-state online sellers are expected to pass this session.

J.R. Davis, spokesman for Governor Hutchinson, said the governor doesn’t have a position on Davis’s bill.

“He thinks there needs to be a mechanism in place for excess revenue to go towards income tax reduction...As far as how to do that, that’s something the task force should look at.”

On Feb. 1, Hutchinson signed a $50 million tax into law. The law includes the creation of a tax reform task force to consider ways to further reduce Arkansas income tax.

Davis said he would be filing amendments to his bill this week. He said he would like to get as close as possible to "a dollar for dollar income tax reduction," rather than the $70 million threshold.

This reporting is courtesy of the Arkansas Nonprofit News Network, an independent, nonpartisan news project dedicated to producing journalism that matters to Arkansans.

The Arkansas Nonprofit News Network is an independent, nonpartisan news organization dedicated to producing journalism that matters to Arkansans. Our work is re-published by partner newsrooms across the state.