Gov. Sanders announces plan to eliminate grocery tax

Gov. Sarah Sanders announced the filing of a bill that would repeal the remaining 1/8th-cent sales tax on groceries in a press conference Tuesday (March 4).

The Grocery Tax Relief Act would repeal the last of the state’s grocery taxes, which previously were reduced under Govs. Mike Beebe and Asa Hutchinson. Sponsors are Sen. Bart Hester, R-Cave Springs, and Rep. Kendon Underwood, R-Cave Springs.

Ending the remaining tax on food ingredients would reduce state tax collections by $10.9 million. The bill would not affect county and municipal grocery taxes. The change would go into effect Jan. 1, 2026.

The 1/8th-cent sales tax, which would continue to apply to non-grocery products, was enacted after voters passed Amendment 75 in 1996. Sanders’ father, Gov. Mike Huckabee, led the efforts to pass the conservation tax devoted mostly to the Arkansas Game and Fish Commission and the Arkansas Department of Parks, Heritage and Tourism.

Roughly 45% of the proceeds, or $4.77 million, go to Game and Fish, while another 45% goes to the Arkansas Department of Parks, Heritage and Tourism. Another 9%, or $950,000, goes to the Division of Arkansas Heritage, while 1%, or $110,000, goes to Keep Arkansas Beautiful, an agency dedicated to litter prevention.

From that distribution, another 2%, or $220,000 is withheld for the State Central Services Fund, while 1%, or $110,000, goes to the Constitutional Officers Fund.

Sanders said in her State of the State address she would work with the Legislature to end what she called the state’s most regressive tax.

At the same press conference March 4, she announced the filing of the Good Neighbor Act, which expands liability protections for food donors and food banks. That bill is being sponsored by Sen. Breanne Davis, R-Russellville, and Rep. Chad Puryear, R-Hindsville.

Among those affected would be retail grocers, wholesalers, hotels, restaurants, caterers, farmers, nonprofit food distributors, schools, churches, religious organizations, and hospitals, along with food banks.

“These bills are the definition of commonsense conservatism — giving Arkansans a hand up, not a handout, to help break the cycles of poverty and dependency,” Sanders said.

Sanders said there have been instances in the past several years of food banks not being able to accept certain donated products.

“Ultimately, it shouldn’t be hard to help out your fellow citizens, and so we want to make that as easy as possible,” she said.

Sanders said the affected agencies have “very healthy, strong budgets,” and she was confident the state can continue to break tourism records. She said more than 50 million visitors traveled to Arkansas last year.

Marty Ryall, director of the Division of Arkansas Heritage, said with its revenue streams growing elsewhere, he is confident his agency can absorb the loss in its $51 million budget. He doesn’t expect his agency will have to make any cuts.