Little Rock mayor rebukes state legislature, Congressmen over Internet sales tax

Little Rock Mayor Mark Stodola on Wednesday publicly criticized the Arkansas General Assembly and part of the state’s congressional delegation for not backing state and federal legislation to allow the state’s largest city to capture sales tax revenue from local Internet sales.

During the public comment period following the monthly meeting of the Little Rock Port Authority, the mayor of the state’s largest city rebuked the Republican-led legislature and three of the state’s congressional lawmakers for failing to support legislation giving the city the go-ahead to collect taxes on Internet sales.

“This is really emasculating our businesses locally,” the Little Rock mayor said.

Stodola’s strong words followed a Little Rock City Council meeting on Tuesday night where city directors overwhelmingly approved a resolution requesting Gov. Hutchinson and the Arkansas General Assembly to revisit legislation to require remote online vendors to either collect and remit state or local sales taxes on Internet sales.

The resolution also highlights information from a recent U.S. Census Bureau that notes 8.1% of all sales are now Internet based, up 15.1% from a year ago. Based on that data, Little Rock city officials state that sales and use tax not paid in any given year from Internet sales would amount to $10.3 million “available to the City to help provide necessary services to its citizens.”

“The Mayor and Board of Directors jointly request that the Governor, as quickly as possible, have placed on a call for the Arkansas General Assembly a statutory scheme similar to the one approved in Colorado which provides the necessary information needed for the State of Arkansas, and local governments within the State of Arkansas, to collect Compensating Use Taxes from persons who make Internet and interstate purchases of goods and materials to be used within the respective jurisdictions,” the resolution states.

At the Little Rock Port meeting, Stodola reiterated the city council’s request for the governor to send the legislature back to the State Capitol to address the Internet sales tax issue. Reps. Charles Blake, D-Little Rock, and Clint Penzo, R-Springdale, were in the audience at the port meeting as Stodola lambasted the legislation inaction.

“Seriously, I hope (they) take this back up in the special session,” he said.

Nearly two weeks ago, lawmakers on Monday closed out the 2017 session by rejecting the so-called Amazon tax bill, which would have allowed remote retailers to collect and remit sales and use taxes from an increasing number of Arkansas taxpayers who shop online.

No plans for special session on Internet sales tax

Senate Bill 140, sponsored by Sen. Jake Files, R-Fort Smith, was defeated on the House floor by a vote of 43-50, with seven members not voting. House sponsor, Rep. Dan Douglas, R-Bentonville, made the argument that Arkansas needs to join the growing list of states that will allow online retailers without a physical presence in the state to collect state and local sales taxes from online shoppers who frequent popular e-commerce sites such as Amazon.

Under Files’ legislation, any online retailer without a nexus in the state that delivers or sells their wares in Arkansas still must remit sales and use taxes if they have gross revenues exceeding $100,000 or had at least 200 separate sales transactions.

Supporters of SB140 say the legislation was modeled after a similar law enacted in South Dakota that would allow the Department of Finance and Administration to collect sales and use taxes not now collected. State lawmakers and policymakers have projected that legislation to allow DF&A to collect sales and use taxes from remote online retailers could potentially bring between $30 million and $150 million in new revenue in state budget coffers.

The bill was originally approved by the Senate in a vote of 23-9, but remained stuck in a House committee for nearly a month after Amazon announced in late March it would begin collecting sales taxes nationwide in 45 states on April. Alaska, Delaware, Oregon, Montana and New Hampshire don’t collect sales taxes.

The legislature adjourned on April 3 after approving a $5.5 billion budget for the biennium. Lawmakers will come back to Little Rock in early May to officially close the assembly and consider a possible budget shortfall. However, top House and Senate leaders expect the governor to call a special session quickly to deal with changes to the state’s Medicaid program and possibly other untidy issues.

Senate President Pro Tempore Jonathan Dismang told Talk Business & Politics on Wednesday there are no plans to include bringing up Internet sales tax legislation in a special session. He has said that a special Blue Ribbon tax policy task force may take up the issue when it begins meeting 30 days after the session ends.

Congressmen ‘taking a walk’ on tax fairness, mayor says

Besides taking the Arkansas legislature to task, Stodola also said the Arkansas congressional delegation needs to come together in unison and support federal legislation to force online merchants to collect online sales taxes. He gave special kudos to Rep. Steve Womack, R-Rogers, along with Sen. John Boozman, R-Arkansas, and Rep. Rick Crawford, R-Jonesboro, for backing such legislation.

In particular, he said Womack’s efforts in 2016 to sponsor a “Main Street” tax fairness bill to remove the exemption for collecting sales taxes on Internet sales will level the playing field against local “brick-and-mortar” retailers who have to collect and remit sales tax.

To date, no support for several bills to collect internet sales tax has garnered enough support to move through Congress. Stodola said Sen. Tom Cotton, R-Ark, Rep. Bruce Westerman, R-Hot Springs, and Rep. French, R-Little Rock, need to come together with the other three Arkansas lawmakers to bolster support for several bills in committee.

“The rest of them are taking a walk on this,” Stodola said of Cotton, Westerman and Hill.

In response to Stodola’s criticism, Hill spokesman Michael Siegel said the Little Rock congressman has met with a large group of mayors, city council members and state representatives on the internet sales tax issue and made it clear he supports finding a resolution to the problem.

“However, after the state’s legislative attempt to create a fix failed, he is waiting to see a similar version to the bill (Rep. Jason) Chaffetz, R-Utah, introduced in the last Congress before deciding what the best legislative path forward would be,” Siegel said. “Congressman Hill will continue to have open dialogue with Mayor Stodola to find the right solution that will benefit Little Rock and the rest of the state.”

Representatives for Sen. Cotton and Rep. Westerman did not respond immediately to Talk Business & Politics’ request for comments concerning Stodola’s comments.