Right after Arkansas taxpayers file their annual state and federal income tax returns, lawmakers will begin a review process that could lead to a tax break.
On April 19, just two days after this year’s filing deadlines, members of both the House and Senate Revenue and Tax Committee will begin an interim study of every tax exemption and exclusion on the Arkansas books.
The idea was first floated by House Revenue and Tax Committee chairman Rep. Davy Carter (R-Cabot), who has said the overall review will hopefully lead to outdated exclusions that might allow for a reform of personal income tax rates in Arkansas in a revenue-neutral fashion.
“For several reasons, Arkansas has been able to endure the economic downturn better than most other states in the union. As such, I think that we have a small window of opportunity to consider policy changes that could make Arkansas even more competitive nationally and generally a better place to live and work,” Carter said when he first suggested the review last November.
He has noted that there are 121 current sales tax exemptions for Arkansas industries, businesses and individuals that total more than $1.2 billion annually.
Carter tells Talk Business that the review study will now be a joint effort with his Senate counterparts, and he expects April 19th to be the date to launch the months-long hearings.
Senate President-elect State Sen. Larry Teague (D-Nashville) said he’s ready to roll up his sleeves and get to work with the top-to-bottom study of exemptions. He says it makes sense to work in conjunction with the House on this rare review process.
“It’s a daunting task. To do it right will take a lot of energy,” Teague said. “We’re gong to let Carter take the lead on it, but we [Senators] want to be there to learn as much as we can.”
Neither Carter nor Teague say they have any preconceived notions of what the exemption review results may be.
After the tax exemption review is completed, state lawmakers are expected to make plans for potential legislative changes for the 2013 regular session.