Group wants to up sales tax exemption on used cars to $20,000

A new group has formed to give a bigger tax break to used car buyers in Arkansas and an outgoing state representative will help with the effort.

Arkansans for Reduced Car Sales Tax formed a ballot question committee with the Arkansas Ethics Commission on Friday (Feb. 21). Eric Harris of Springdale, a former State Representative who served in the early 2000’s, is listed as the treasurer of the group, while current State Rep. Laurie Rushing, R-Hot Springs, is also listed on the paperwork.

The Facebook page for Arkansans for a Reduced Used Car Sales Tax said it wants to help voters with “the initiated act to eliminate the sales tax on the first $20,000 of value on the purchase of a used car.” The law now exempts the first $4,000 of a used car purchase from sales tax.

The initiated act goes further to also account for an increase in the exemption based on annual cost-of-living adjustments as determined by the U.S. Department of Labor’s Consumer Price Index.

“The issue of the used car tax has been one that has been being tossed around the legislature for several sessions now, and while it is a popular and positive issue, it just seems to get stalled out around the Capitol,” Rushing tells Talk Business & Politics. “I was approached by former Representative Eric Harris from Northwest Arkansas about possibly helping him get this issue on the ballot, and I agreed to help him with this issue.”

Rushing said many people find it hard to buy dependable transportation because they have the liability of the sales tax due 30 days after the purchase.

“People will save their money for a down payment, and then about the time the first car payment is due, they have to come up with the sales tax that is due on the purchase as well. This can lead to many people having to make a decision between the first payment or paying sales tax,” she said.

“In Arkansas, we are lacking in the area of dependable public transportation and it is important for Arkansans to have reliable transportation to get them to and from work,” Rushing added. “This tax cut puts money back into middle and lower income Arkansans that need it most.”

The group would need 71,321 signatures by July 3 to qualify for the November ballot. Rep Rushing’s Facebook page is promoting the group’s effort, which includes circulating petitions at polling locations on March 3 as well as at auto auctions in Little Rock starting Wednesday.

Rushing is not running for re-election this year and has served in the Arkansas House since 2015.

She was a co-sponsor of a measure in the 2019 regular session to up the exemption on sales taxes for used vehicles to $7,500. A fiscal impact statement from the Department of Finance and Administration on that legislation estimated it would result in a $14.2 million loss of revenue to the state. The bill passed the House of Representatives with 84 votes, but the session ended before the Senate took up the measure.