Rep. Carter’s Sales and Use Tax Review Expands In Scope

A first reading of an outline slated for an April Joint Revenue and Tax Committee meeting indicates the scope of the interim committee’s work may be expanding.

Rep. Davy Carter (R-Cabot), who has proposed a review of every sales and use tax exemption and exclusion on the Arkansas books for possible income tax reform, tells Talk Business that the committee’s work will focus on “fact-finding and education” in two different phases.

“The goal here is to educate every member on what we currently have on the books,” said Carter.

He says in Phase 1 of the review, the sales tax exemptions will be studied and discussed. He’s invited Department of Finance and Administration personnel to answer questions regarding exemptions, including how interstate commerce clause exemptions may be different than those allowed by state statutes. Also, the committee will study individual, corporate, property, severance and border tax policies, as well as the justification for certain economic incentives.

Phase 2 will consist of discussing any specific member changes to the tax code and its cause and effect.

“This is a general outline and not exhaustive,” Carter said. “I know this is a daunting task but even if we get through the fact-finding phase, I think that we are making progress.”

Carter said he hopes all of the review of the Arkansas tax code can occur before the 2013 legislative session so that members will have as much knowledge as possible on the subject in advance of what he predicts will be a number of tax cut proposals.

“I expect we’ll see quite a few tax cutting proposals in 2013. This interim committee work will be good homework in advance of that debate,” Carter said.

PHASE 1 AND 2
The agenda for getting through the Revenue and Tax Committee schedule is expected to follow this order:

Phase 1 will be a fact-finding and educational phase on the following issues:

– Sales & Use Tax Exemptions
1.  Discuss Legislative Taxbook’s list of exemptions
2.  DFA personnel to answer questions regarding exemptions such as interstate commerce clause exemptions versus exemptions allowed by state statutes

– Personal and Corporate Income Tax – rates and deductions
1.  DFA income tax administrator

– Economic Development Incentives
1.  Economic Development Commission – review of current incentive programs
2.  DFA personnel to provide information  on the sales & use tax exemption, tax rebates and income tax credits currently being provided through an incentive program

– Property and Severance Taxes
1.  Assessment Coordination Department – Local Property Taxes
2.  Public Service Commission – Utility Property Tax Assessments and local distributions
3.  DFA personnel to discuss severance taxes

– Discussion of Border State Tax Rate and Base Comparisons

Phase II will consist of discussing specific member proposals to the tax code and the potential implications.

A joint meeting of the House and Senate Revenue and Tax committee is expected to convene on April 19 for its first meeting on the topic.