House Revenue and Taxation Committee
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Bills discussed (3)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
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HB1056
· 3 mentions in chapter, transcript
Matched: “HB1056”
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Pre-2017 bill | ||
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HB1160
· 2 mentions in chapter, transcript
Matched: “HB1160”
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Pre-2017 bill | ||
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HB1016
· 1 mention in transcript
Matched: “…bill numbers. Representative Baird, are you prepared to run HB 1016? I don't see him. Representative Woods, 1042.”
|
Pre-2017 bill |
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Chair
Unverified
0:00
I want to start out, I'm going to read the subcommittee appointments, I know the speaker announced the chairs yesterday, and if you already know this, I apologize, but on the revenue tax subcommittee, sales use, miscellaneous taxes and exemptions, permanent subcommittee, Bruce Westerman is the chair Uvalde Lindsey, the vice chair
Robert Moore, John Burris Justin Harris, Nate Bell and myself and Larry are ex-officio members of that committee Income Taxes, Personal and Corporate Permanent Subcommittee Fred Love is the chair Linda Collins-Smith is the vice chair Keith Ingram, Lane Jean Mark Bibiano, Mike Patterson and myself and Mr. Cowley, ex-officio members. And finally, the complaints and remediation, permanent subcommittee,
Homer Lenderman is the chair, Kelly Link, vice chair, Ed Garner, Alan Kerr, Stephen Meeks, Charlie Collins, and myself and Mr. Cowley. So I know that was a lot, and it will be distributed today. So I just wanted to pass that along. Just got that five minutes ago. Also, one other announcement, we are going to have our group photo Thursday, January the 27th. And our committee meets at 10, and if we can be here about 10 minutes early, that would be great.
All right, that's all the housekeeping items that we have. I don't know what's going on over here, but I think we have some attendees in our meeting today that welcome everybody, even some maybe overflows of, I think they've reached maximum capacity in the other committee room for what I've been told. For the audience members, I would remind you there is a sign-in sheet here if you would like to speak for or against any bill. I propelled to mention that last week. It's over here to the right if you would write the bill number that you're speaking
and your affiliation and if you're speaking for or against. So with that being said, I'm going to run down the bill numbers. Representative Baird, are you prepared to run HB 1016? I don't see him. Representative Woods, 1042.
Speaker 6
2:38
Representative Woodson, HB 1056. You're recognized.
Speaker 4
2:50
Thank you, Mr. Chairman, members of the committee. HB 1056 is a
Speaker 9
3:02
bill about fairness and equity. It started in 2009. The bill passed out very similar to this and got bottled up in the Senate in the closing days of the 2009 session and died there. This resurrects that, and I want to sort of very briefly tell you why we need to enact 1056
to make sure that we have fairness in the tax code. I think all of us agree that all of our citizens want to be ensured that we're being treated fairly. We're being treated like everybody else in our same circumstance. So the problem that exists today with the existing statute starts in 2007. What happened prior to 2007 was there were three categories of taxpayer, the single individual,
the married couple filing jointly, which we're familiar with, and heads of household. In 2007, an amendment, and it was Act 195, was enacted to raise the amounts of gross income that were allowable for the low-income tax table, and that's what this is really all about. But in that amendment to raise the levels of the low-income tax table, they created new categories. I still had the single individual.
That was no change. But the married family filing jointly was split into two categories, a category with one dependent and a category with two dependents, families filing jointly, one dependent, two dependents. When they got to the head of household, instead of having two categories, they only had one, head of household filing with one dependent. The bottom line of that is a
Speaker 10
4:58
head of household, usually a single mom, with two dependents exited out of the low-income tax table
before they reached an equitable level with the category of married, filing jointly with two dependents. That basically is bottom line.
Speaker 9
5:17
Arkansas is one of one of the 11 states that taxes folks in the poverty level, and that seems like that's wrong. Arkansas, in fact, single mom in 2.09, federal poverty level, was about $17,000. That single mom would pay about $205 in state income tax.
That's the third highest in the United States. Hawaii is higher. Alabama is higher. But that just seems like that's wrong, and we need to correct the error in the tax code. With that, let me stop and see if there are questions. I'd be glad to try
Chair
Unverified
5:59
to answer those. Representative Barris, you recognize for
Speaker 4
6:01
a question. Thank you, Mr. Chairman. Excuse me. I think this is probably a good deal. Representative Lindsay, as you know, Representative Baird filed one similar to this early on in the pre-filing process.
I guess, actually, before I ask any more questions, I haven't spoken with you prior to the meeting. What is your desire for the committee to do today? That might sound odd, but are you wanting to pass this bill out today? No, Representative
Speaker 9
6:31
Burris. I need to amend the bill. I've talked to Representative Burris about his bill, 1016, and he has agreed to sign on to my bill, and we have had that in writing in the process. And Representative Burris is on 1016, and he's also graciously agreed to sign as co-sponsor of this bill.
So I am now gathering, quite frankly, gentlemen, the sponsorship, trying to find sponsorship on the Senate Revenue and Tax Committee so we can have a majority of the Senate Revenue and Tax Committee when this bill exits this committee with your due pleasure, of course. The idea is for us not to get held hostage again, which was sort of an embarrassment the last time. And I would hope that to pull this bill, if there were no other questions,
and basically put the new sponsors on it and hold it for amendment for sponsorship and to reintroduce the bill and be back on your agenda first part of next week. Okay. I think
Speaker 4
7:34
I appreciate that. And seeing that we'll probably hear this bill later, I do just want to ask one more question, then I'll save the rest for later. I did see the impact statement, which was for about $3 million to $4 million. I think we all know the burden that we're under on this committee,
and we do have a very real obligation to make sure that we pay for whatever tax cuts we do pass. Do you have any idea about where that money to pay for this tax cut would come from?
Speaker 9
8:08
Well, Representative Burris, I'm not sure that I would, at this particular juncture, want to put a $4 million price tag. But obviously, with the $1.86 COLA raise, we know that's $15 million general revenue every year and from now on out.
If you defer that for 60 days, you just about generate $4 million in savings and general revenue for the state of Arkansas. So that's merely a deferral, obviously, from July 1 to 60 days after that. It would have to be an annual deferral. An annual deferral, but you just establish the effective date of the COLA as September 1 instead of
Speaker 4
8:48
July 1, and you've saved $4 million in perpetuity. I certainly think there's ways to do it, and I support you in finding those.
I've tried to make clear to everybody as we go through this process that that is certainly part of our job. It's to have a debate about the tax code, and that involves paying for the tax cuts we want to enact. And I know that you're better at that than anybody, but I just want to make that clear from
Speaker 9
9:12
the outset. Thank you. You're gracious and kind, and I agree with the philosophy. If cuts need to be done, and there are probably some like
Speaker 4
9:20
this bill that need to be done, we need to find a way to pay for it. Okay. Thank you, Mr. Lindsay. Thank you, Mr. Chairman. Representative Cowley, you're recognized for a question.
Chair
Unverified
9:29
Thank you, Mr. Chair. What did you say probably the tax would be on the individual? Did you say how much it would be, $200 or
Speaker 9
9:41
something like that? Is that what you said a while ago? Representative Cowling, the information that I have based on the federal poverty level in 2009 was $17,102. That's the basic cap level of the federal poverty level. In Arkansas, a single mom making that would pay $205 because the cap on her low-income tax table doesn't allow her to go past that.
As I understand, the third highest in the United States, Hawaii and Alabama, both would tax that single mom more than Arkansas. Arkansas is one of 11 states that continues to tax, because of the error, folks that are in the low-income tax table within the federal poverty level. You're
Speaker 20
10:29
recognized for a question. Thank you, Mr. Chair. Representative Lindsay,
after you pulled the bill down and talked to Representative Baird and the other folks, I'd appreciate it if you'd come by so I
Chair
Unverified
10:44
could sign on as a co-sponsor. Thank you. Thank you, Mr. Connors. I appreciate that. Representative Lindsay, I've got a question about what happened. I guess you mentioned the bill going down to the Senate in 2009. Did it mistakenly get left off? I don't mean that to be a trick question.
Speaker 4
11:04
I really don't know. What was the issue there, if you know? Mr. Chairman,
Speaker 9
11:11
in recollection of 2009, this House committee was relatively lenient, shall we say, in passing out income tax, sales tax credits, and sending them to Senate. Obviously, there was the proposal to reduce the state income tax on groceries by one cent was a priority.
That passed out of the Senate, and the rest of the issues were bottled up, if you will, in the Senate. And I'm not privy to the
Chair
Unverified
11:50
negotiation of why that happened. Okay. Well, I'm sorry. That's what happened. I didn't mean to get you into all that. I was going back to the – I had in my mind about the error being in the code, But this was recognized at that point. It wasn't written in the error during that time. No, sir, it was not. It was $2.07 on the code.
Chair
Unverified
12:18
Thank you. Okay, I don't see any more questions. Is there anybody from the audience that would like to
Representative Davy Carter
Unverified
12:27
speak for or against the bill? Anyone? Okay. Representative Lindsey, what's your request to the committee today?
Speaker 4
12:41
To pull this from the active calendar for amendment forward to add sponsors and then to
Speaker 9
12:47
add back to the active calendar at the time the bill has amended. Very well. Okay. Well, thank
Speaker 4
12:56
you. Thank you, Mr. Chairman. Thank you,
Chair
Unverified
13:03
members of the committee. Okay. The next item on the agenda is House Bill 1160.
Representative Kathy Webb
Unverified
13:12
Representative Webb, you're recognized. Thank you, Mr. Chair. Thank you, members of the committee, and I have John Tice with me from DF&A. Basically this bill is just very straightforward, and it's a bill to help some small business owners by cutting down some of the red tape and the paperwork that they have to file.
What it says is currently if you pay severance tax, you have to file a report every month. What this bill does is changes that, and if you pay under $100 a month, or if you pay under $25 a month, you can go to a quarterly or an annual basis. I think everybody has an impact statement. There's not a negative fiscal impact on the state. It's not going to cost anything to do this. It's just going to be a little less paperwork, and it's going to help those small business
owners have a little less paperwork. And as a small business owner, and I know there are other small business owners at this table, I think that's something that we can all appreciate. So I was on this committee last time, and I often sat down here with Mr. Tice on the opposite side, so to speak. He's here with me at the end to support this and answer any questions that you might have. I'd appreciate a good vote on this bill. Thank
Chair
Unverified
14:49
you, Mr. Chair. Thank you, Representative Webb. Representative Kerr, you're recognized for a question.
Speaker 4
14:56
Thank you, Mr. Chairman. Representative Webb, just briefly, can you tell
Speaker 28
15:00
me which paperwork I can look forward to not filling out? Mr. Kerr, I think you
Speaker 27
15:07
and I need to work together, and that will be a separate bill that you
Chair
Unverified
15:16
and I file. All right. Thank you, Mr. Chair. Representative Webb, one question I had from reading the bill this morning. And on page 2, line 6, and I guess in 15, it says the director may notify the taxpayer.
Is that something that's going to be left in the director's
Representative Davy Carter
Unverified
15:34
discretion? Because I think it's written that
Representative Charlie Collins
Unverified
15:40
way. With your permission, I'll ask Mr. Tice to answer
Speaker 31
15:45
that. Mr. Tice, you're recognized. Mr. Chairman, members of the committee, I'm John Tice with DFA. way. This provision is identical to the provision in current sales tax law that lets small sales tax businesses also file quarterly or annually. Based on these same thresholds, the language there, including May, is the same language that was included in the sales tax law and
it just was copied over here. I can assure you this is something DFA very much wants to do. This is a housekeeping proposal that we have recommended to Ms. Webb, and we appreciate her willingness to carry this, but it's something that as an agency we want to do to make it easier for taxpayers to collect and remit the tax and not have to fill out reports so frequently. I'd direct your attention to the second page of the revenue comments. You see out of 572 taxpayers who fill out monthly severance tax reports, 237 of those
would now have this reduced requirement and that improves our work by reducing the number of returns we have to process and lets us spend more time on other, more productive activities.
Representative Davy Carter
Unverified
16:51
I guess should we be concerned with, I mean, I hear your explanation, but, you know, it's been my experience that when you have words like may and statute that creates a little uncertainty. I mean, we're either going to do it or you're not. I mean, do we put a will or a shall or a – I mean, is that a fair question?
I can assure you that it's something we will do. Okay. Representative Collin Smith, you
Representative Charlie Collins
Unverified
17:22
recognize for a question? Some of us do not have all
Representative Davy Carter
Unverified
17:36
have this. We don't have all the reports. That's all that's in the packet. It's just the first page. We have the impact statement, but there's not any additional paperwork in your packets.
Chair
Unverified
17:47
Representative Burris, you're recognized for a question. Thank
Representative John Burris
Unverified
17:50
you, Mr. Chairman. Just a couple quick ones, and this may sound silly, but what kind of businesses normally are we talking about that
Speaker 31
18:00
pay a severance tax less than $100 annually? MR. There are small landowners who have small timber production or a small amount of gravel being severed or possibly even very small – there's some very old natural gas wells in western Arkansas that have been in production for years and years, and those individual wells have to file a report.
MR. Got you. MR. Those are
Chair
Unverified
18:21
the types of folks we're dealing with. MR. Okay. And just out
Representative John Burris
Unverified
18:24
of curiosity on the effective date, what was the reason for doing it January 1 of 2012 as opposed to fiscal year or something like that? Is it just because of
Speaker 31
18:36
the way you all do it in-house? That's correct. Again, that's very similar to the sales tax. You calculate whether someone qualifies as a quarterly or annually filer based on the prior calendar year. This gives us time to calculate the prior year, notify those taxpayers that rather than
filing monthly, you now have to file quarterly or annually, and it's just to provide adequate notice to the taxpayers in time to make the calculation. Okay. Thank you. Thank
Speaker 43
19:01
you, Mr. Chairman. Representative Westerman, you're recognized for a question. Could
Chair
Unverified
19:08
you repeat the number of taxpayers that will be affected by this? 237. Any more questions?
Representative Meeks, you're recognized. Thank you, Mr. Chairman. Generally speaking, I'm supportive of the bill, but
Representative Stephen Meeks
Unverified
19:31
one question or concern that I have is, and it may not be an issue with such a small tax base, is when you're going from monthly payments to quarterly or annual basis, Is there any concern that it could create issues that the taxpayers would start to overlook these payments and start creating collections issues because it's such a broad period of time between collections?
Speaker 31
19:56
Representative Meeks, that has not been our experience with small sales tax filers. Of the about 72,000 sales tax filers, roughly 24,000 of those file quarterly or annually, and our computer system will send a notice that reminds someone if they fail to file. Also, the taxpayer will receive forms information that will identify whether they file quarterly or annually. So we have an existing system that does keep track of that and notifies the taxpayer if they miss one.
Speaker 32
20:32
Okay, seeing, I don't see any more questions. Is there anybody from the audience that
Representative Davy Carter
Unverified
20:37
would like to speak for or against the bill? Okay. Seeing none, Representative Ingram, do you recognize? I'll make a motion to do pass. We've got a motion to do pass on the table. You know, I think that we have a, there's no revenue impact here. So I think proceeding forward is within the direction that the committee has given
as far as what we're wanting to do procedurally dealing with these tax bills. So don't let that be an issue on your vote. So I've got a motion to do pass. What's the will of the committee? All in favor, say aye. Aye. Any opposed? Motion carries. Thank you. Thank you, Mr. Chair. Thank you, members of the committee. I don't see any other items on the agenda, so with that, we shall stand adjourned.
Agenda
Documents
No documents posted.
Speakers
Chair
Unverified
Speaker 6
Speaker 4
Speaker 9
Speaker 10
Speaker 20
Speaker 21
Representative Davy Carter
Unverified
Representative Kathy Webb
Unverified
Speaker 28
Speaker 27
Representative Charlie Collins
Unverified
Speaker 31
Speaker 36
Representative John Burris
Unverified
Speaker 43
Representative Stephen Meeks
Unverified
Speaker 32