Last week,\u00a0Amazon announced it planned\u00a0to 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.<\/p>\n
Rep. Andy Davis (R-Little Rock), the lead sponsor of the bill, said, \u201cThis was the quickest way to get something out there to demonstrate to my voters and to other members\u2019 voters that our intention is to reduce income taxes if out-of-state internet retailers begin to pay the state sales taxes.<\/p>\n
\u201cMost 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.\"<\/p>\n
House Bill 1512 would expand\u00a0an 2015 act\u00a0that was largely hypothetical at the time it was passed. In anticipation of Congress passing a law\u00a0requiring 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\u00a0be used for income tax reduction. Federal law does not require out-of-state online sellers to collect sales tax.<\/p>\n
Davis said the 2015 bill\u2019s lead sponsor, former Rep. Kelley Linck, wanted to encourage Congress to pass internet sales tax legislation by demonstrating that, if it\u00a0did, states would use the increased revenue to reduce income tax.<\/p>\n
Davis\u2019s 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.<\/p>\n
J.R. Davis, spokesman for Governor Hutchinson, said the governor doesn\u2019t have a position on Davis\u2019s bill.<\/p>\n
\u201cHe 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\u2019s something the task force should look at.\u201d<\/p>\n
On Feb. 1, Hutchinson signed a\u00a0$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.<\/p>\n
Davis said he would\u00a0be filing amendments to his bill this week. He\u00a0said he would like to get as close as possible to \"a dollar for dollar income tax reduction,\" rather than the\u00a0$70 million threshold.<\/p>\n