Arkansas Task Force to Analyze Sales Tax Exemptions

The state of Arkansas has appointed a task force to analyze the state's sales tax exemptions.  With new federal tax reform in the works, the state is looking to address areas of its own policies that are in need of adjustment.  The Tax Reform and Relief Legislative Task Force will take a look at the state's 101 exemptions and determine if any of them can be eliminated.

PFM Consulting Group presented a report with a seven-year analysis of the exemptions and their impact on the state's revenue to the task force.  Of note, the report found that exemptions for fiscal 2011 totaled $1.4 billion.  Exemptions with the biggest impact included gasoline, food, prescription drugs, and certain sales to nursing homes.  The report also found that the state's sales tax collections for fiscal 2017 was $3.3 billion.

Senator Jim Hendren, co-chair of the task force has asked the team to determine which exemptions can be cut by January of next year.  He says the first step is to determine which exemptions are off the table because of federal law or the constitution.  He has asked his team to create a hypothetical report of what collections would look like without the exemptions so that he could gain a better understanding of the math.  Later this year the 16 member task force will have the opportunity to speak with other states about the pros and cons of their own tax reform.  In addition to the exemptions, the task force will look at sales tax on Amazon purchases, as well as explore the possibility of bringing in more auditors.