AEDC Director Says Reinvestment Tax Cut Should Be Considered

Grant Tennille, director of the Arkansas Economic Development Commission, told a legislative panel on Wednesday (Aug. 29) that a $40 million tax cut for manufacturers and large industry reinvestments should be considered.

Tennille said, as he has on previous occasions, that there is a difference in how the state calculates sales tax on equipment purchased by existing Arkansas-based companies that look to expand operations in state.

He said that the tax calculation penalizes companies interested in expanding and has been the subject of conversation in several negotiations.

Rob Moritz with our content partner, the Arkansas News Bureau, covered the Joint Committee on Economic and Tax Policy and reports:

“We need to do everything we can to incentivize companies to reinvest in their facilities in Arkansas,” Tennille said. “That’s what keeps them here, that’s what helps them grow. We shouldn’t punish them for reinvesting.”

“Just in the time that I’ve been at the agency I’ve gotten pulled into the middle of some of these fights,” he said, adding by subjecting the purchases to upgrade existing facilities to the state sales tax, “my contention is we are placing a burden on this company.”

“There is some bean counter sitting somewhere off from here who has a certain amount of money to make investments across a portfolio of operations in a number of different states… he’s going to make those investments where the dollar goes the furthest,” Tennille said. “If they avoid investing in Arkansas because they don’t want to pay sales tax on the replacement widget, then ultimately that facility becomes less efficient. As it become less efficient, its profile in the company’s portfolio changes, it goes to being a swing plant, or it doesn’t get to start working on the new line of products.”

You can access Mortiz’s full article at this link.