Arkansas tax exemption proposed for manufacturers

A bill that could help manufacturers large and small in the Fort Smith region by cutting utility costs was filed Tuesday by Rep. David Dunn, D-Forrest City.

The bill — HB 1624 — would create a complete sales tax exemption for most fuels used by manufacturers.

Currently, manufacturers receive a 2% tax break on the sales tax paid on their natural gas and electric bills, but only 18% of the state’s manufacturing base is tapping the deduction, according to a previous report from Talk Business, a content partner with The City Wire.

Two years ago, state lawmakers passed the narrower utility sales tax exemption for manufacturers that ultimately removed 2% from the 6.5% tax. That tax was estimated to reduce state revenue collections by $30 million at the end of fiscal 2009.

Dunn’s proposed legislation also would expand the definition of manufacturers to include electric generation plants.

Link here to read more about this legislation.