Internet sales tax bill revived in committee

Sen. Jake Files
Sen. Jake Files

A bill aimed at collecting sales tax on purchases from Amazon and other online merchants advanced out of the Arkansas House Revenue and Tax Committee Thursday after having failed to pass three times before in the same committee. Each time the previous vote had to be expunged before the bill could be presented again.

Senate Bill 140 would require online sellers that gross more than $100,000 or process at least 200 separate transactions to collect sales tax or to report annually to the state Department of Finance and Administration information about online sales in Arkansas, including the name and address of each Arkansas purchaser and the amount of money spent. The bill already passed in the Senate.

Sen. Jake Files (R-Fort Smith), lead sponsor of SB 140, said it was a tough bill, but it "has the opportunity to probably have the most impact of anything we do down here for all of our local businesses and for cities and counties as well, as well as the state."

Rep. Reginald Murdock (D-Marianna) proposed an amendment to Files’ bill that sought to earmark $25 million of the money collected to be added to the Medicaid Program Trust Fund, and to fund rural fire and police protection grants, pre-K education and after-school programing and $100 million to highway repairs. The panel rejected the amendment. Similar amendments proposed by Democrats on the committee previously failed to pass.

Democrats hold 10 seats in the House Revenue and Tax Committee, giving them more power on that committee than any other in the legislature.

House Minority Leader Michael John Gray (D-Augusta) said even though the amendments were not incorporated into the bill, the ideas within the amendments were brought into the conversation about how potential increased revenue from online sales tax collection could be used.

Gray said, "Having these discussions over these last 90 days about this bill and getting some real conversation with leadership on both sides of the aisle ... I don’t think those things were really being heard at the beginning of this session, but when we got to today, [we got] some real strong commitments from our friends across the aisle that those issues will be of a priority as we move forward with a new tax task force and into the new budget."

Rep. Joe Jett (R-Success), chair of the House Revenue and Tax Committee, said of the Democrats on the committee, "My commitment to them was when we get into the tax task force, I'm fully prepared to make sure their voices are heard." Jett said he told members he was only going to run the bill again if there were enough votes to pass it.

After the vote, Files told the committee, "I promise that I will work with you on this moving forward."

In a statement, Governor Hutchinson said it is premature to decide how new revenue from online tax collection should be used.

"We need more time to measure any results and to be sure current budget needs are met. I have a long term goal of reducing income tax rates, but again it is too early to make decisions on future revenue at this point," he said.

Amazon began voluntarily collecting sales tax on purchases made by Arkansas residents in March. Lawmakers have speculated that sales tax collected by out-of-state online sellers could bring anywhere from $35 million to $150 million in revenue, but, according to the Department of Finance and Administration, the revenue impact of SB 140 is unknown. There is no record of what Arkansas taxpayers are buying on the internet.

The bill now goes to the full House. Files said he is not sure what will happen.

"I think the chances there are 50/50, so it’s going to take a strong effort on the House floor to get it passed," he said. "But at least we’ve got a chance now."

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.