SALES TAX UPDATE TIME
Last week was a not a huge week for quantity of sales and use tax but the quality of the bills filed are great for the taxpayers of Arkansas.
HB 1661—filed by Kendon Underwood would repeal the sales tax on food and food ingredients. This is a not an exemption that would be a huge revenue loss to the State, but the city and county budgets would take a considerable hit. Although the State tax rate on food and food ingredients is only 1/8 of a percent, the city and county rates go at full rate and are a major funding source for local budgets.
SB 441—filed by Dave Wallace and Joey Carr would apply the sale tax exemption for machinery used directly in the manufacturing process to machinery and equipment purchased and placed in inventory for later use for repair or maintenance.
This is a great bill for manufacturers who purchase parts and put those parts into a “stores” account for use later. This has been a great concern for many manufacturers who purchase parts but do not immediately put those into service. These parts are critical parts for manufacturing and the facilities who cannot afford to shut down a line while awaiting parts for the repairs and this bill would make them exempt on the front end rather than paying tax now and then having to request a refund at a later date.