Revenue & Tax - Senate
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Transcript
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Bills discussed (23)
| Bill | Title | Sponsor | Status |
|---|---|---|---|
|
SB394
· 5 mentions in chapter, agenda, transcript
Matched: “SB394 J. Boyd TO AMEND THE LAW CONCERNING THE COLLECTION OF SALES…”
|
TO AMEND THE LAW CONCERNING THE COLLECTION OF SALES AND USE TAX ON MOTORBOATS; AND … | J. Boyd | Sine Die adjournment |
|
SB478
Act 881
· 4 mentions in agenda, chapter, transcript
Matched: “…ON FOR CERTAIN MACHINERY AND EQUIPMENT PLACED IN INVENTORY. SB478 J. Dismang TO PROVIDE ADDITIONAL FUNDING FOR THE ARKANSAS P…”
|
TO PROVIDE ADDITIONAL FUNDING FOR THE ARKANSAS PORT, INTERMODAL, AND WATERWAY DEVELOPMENT GRANT PROGRAM FUND; … | J. Dismang | Notification that SB478 is now Act 881 |
|
SB441
Act 646
· 3 mentions in chapter, agenda, transcript
Matched: “SB441 D. Wallace TO AMEND THE SALES AND USE TAX LAWS CONCERNING E…”
|
TO AMEND THE SALES AND USE TAX LAWS CONCERNING EXEMPTIONS RELATED TO CERTAIN MACHINERY AND … | D. Wallace | Notification that SB441 is now Act 646 |
|
HB1454
Act 541
· 2 mentions in agenda, chapter
Matched: “…ND; AND TO CREATE A WATERWAYS INVESTMENT INCOME TAX CREDIT. HB1454 Ray TO AMEND THE DEFINITION OF A HOMESTEAD FOR PURPOSES OF…”
|
TO AMEND THE DEFINITION OF A HOMESTEAD FOR PURPOSES OF PROPERTY TAXATION; AND TO PROVIDE … | Ray | Notification that HB1454 is now Act 541 |
|
HB1627
Act 521
· 2 mentions in chapter, agenda
Matched: “HB1627 J. Moore TO CLARIFY THAT MEMBERSHIP DUES PAID TO HUNTING OR…”
|
TO CLARIFY THAT MEMBERSHIP DUES PAID TO HUNTING OR FISHING CLUBS ARE EXEMPT FROM SALES … | J. Moore | Notification that HB1627 is now Act 521 |
|
SB549
Act 532
· 2 mentions in chapter, agenda
Matched: “SB549 J. Dismang TO REDUCE THE INCOME TAX RATES APPLICABLE TO IND…”
|
TO REDUCE THE INCOME TAX RATES APPLICABLE TO INDIVIDUALS, TRUSTS, ESTATES, AND CORPORATIONS. | J. Dismang | Notification that SB549 is now Act 532 |
|
SB133
· 1 mention in agenda
Matched: “…THE RIGHT OF EMINENT DOMAIN OR THE THREAT OF CONDEMNATION. SB133 J. Payton TO INCREASE THE SALES AND USE TAX EXEMPTION FOR U…”
|
TO INCREASE THE SALES AND USE TAX EXEMPTION FOR USED MOTOR VEHICLES; AND TO REPEAL … | J. Payton | Sine Die adjournment |
|
SB134
· 1 mention in agenda
Matched: “…OR CERTAIN USED MOTOR VEHICLES, TRAILERS, AND SEMITRAILERS. SB134 J. Payton TO INCREASE THE SALES AND USE TAX EXEMPTION FOR U…”
|
TO INCREASE THE SALES AND USE TAX EXEMPTION FOR USED MOTOR VEHICLES; AND TO AMEND … | J. Payton | Sine Die adjournment |
|
SB215
· 1 mention in agenda
Matched: “…aff Only'. APPLICABLE TO PURCHASES OF USED MOTOR VEHICLES. SB215 Irvin TO PROVIDE A SALES AND USE TAX EXEMPTION FOR WORKING…”
|
TO PROVIDE A SALES AND USE TAX EXEMPTION FOR WORKING HORSES AND FENCING USED IN … | Irvin | Sine Die adjournment |
|
SB256
· 1 mention in agenda
Matched: “…S AND FENCING USED IN A COMMERCIAL AGRICULTURAL PRODUCTION. SB256 B. Johnson TO INCLUDE MACHINERY AND EQUIPMENT USED IN RESEA…”
|
TO INCLUDE MACHINERY AND EQUIPMENT USED IN RESEARCH AND DEVELOPMENT IN THE SALES AND USE … | B. Johnson | Sine Die adjournment |
|
SB261
· 1 mention in agenda
Matched: “…IDE AN INCOME TAX DEDUCTION FOR CERTAIN AGRICULTURAL LOANS. SB261 J. Payton TO PROVIDE FOR AN INCOME TAX CREDIT FOR AN UNBORN…”
|
TO PROVIDE FOR AN INCOME TAX CREDIT FOR AN UNBORN CHILD; AND TO PROVIDE THAT … | J. Payton | Sine Die adjournment |
|
SB269
· 1 mention in agenda
Matched: “…NBORN CHILD FOR PURPOSES OF THE PERSONAL INCOME TAX CREDIT. SB269 B. King TO AMEND THE INCOME TAX ACT OF 1929. SB352 Irvin TO…”
|
TO AMEND THE INCOME TAX ACT OF 1929. | B. King | Sine Die adjournment |
|
SB352
· 1 mention in agenda
Matched: “…CREDIT. SB269 B. King TO AMEND THE INCOME TAX ACT OF 1929. SB352 Irvin TO CREATE INCOME TAX INCENTIVES FOR EMPLOYER-BASED DE…”
|
TO CREATE INCOME TAX INCENTIVES FOR EMPLOYER-BASED DEPENDENT CARE ASSISTANCE; AND TO CREATE AN INCOME … | Irvin | Sine Die adjournment |
|
SB360
· 1 mention in agenda
Matched: “…FOR EMPLOYER PAYMENTS RELATED TO DEPENDENT CARE ASSISTANCE. SB360 Gilmore TO PROVIDE A SALES TAX EXEMPTION FOR TEXTBOOKS, LIB…”
|
TO PROVIDE A SALES TAX EXEMPTION FOR TEXTBOOKS, LIBRARY BOOKS, AND OTHER INSTRUCTIONAL MATERIALS PURCHASED … | Gilmore | Sine Die adjournment |
|
SB38
· 1 mention in agenda
Matched: “…S, AND CORPORATIONS. DEFERRED BILLS Number Sponsor Subtitle SB38 J. Dotson TO AMEND THE INCOME TAX PROVISIONS CONCERNING THE…”
|
TO AMEND THE INCOME TAX PROVISIONS CONCERNING THE APPORTIONMENT OF BUSINESS INCOME; AND TO REPEAL … | J. Dotson | Sine Die adjournment |
|
SB386
· 1 mention in agenda
Matched: “…, AND OTHER INSTRUCTIONAL MATERIALS PURCHASED BY LIBRARIES. SB386 J. Dismang TO REPEAL THE ARKANSAS RIVER NAVIGATION SYSTEM F…”
|
TO REPEAL THE ARKANSAS RIVER NAVIGATION SYSTEM FUND; TO PROVIDE ADDITIONAL FUNDING FOR THE ARKANSAS … | J. Dismang | Sine Die adjournment |
|
SB459
· 1 mention in agenda
Matched: “…ND; AND TO CREATE A WATERWAYS INVESTMENT INCOME TAX CREDIT. SB459 J. Dismang TO INCREASE THE MAXIMUM AMOUNT OF TAX CREDITS TH…”
|
TO INCREASE THE MAXIMUM AMOUNT OF TAX CREDITS THAT MAY BE APPROVED IN A FISCAL … | J. Dismang | Sine Die adjournment |
|
SB460
· 1 mention in agenda
Matched: “…RODUCT AND MOTION PICTURE INDUSTRY DEVELOPMENT ACT OF 2009. SB460 J. Dismang TO AMEND THE ARKANSAS HISTORIC REHABILITATION IN…”
|
TO AMEND THE ARKANSAS HISTORIC REHABILITATION INCOME TAX CREDIT ACT; AND TO INCREASE THE MAXIMUM … | J. Dismang | Sine Die adjournment |
|
SB530
· 1 mention in agenda
Matched: “…ION INCOME TAX CREDITS THAT MAY BE ISSUED IN A FISCAL YEAR. SB530 G. Leding TO CREATE A SALES AND USE TAX EXEMPTION FOR CERTA…”
|
TO CREATE A SALES AND USE TAX EXEMPTION FOR CERTAIN SALES TO A CULTIVATION FACILITY. | G. Leding | Sine Die adjournment |
|
SB540
· 1 mention in agenda
Matched: “…XEMPTION FOR CERTAIN ITEMS AND SERVICES SOLD TO A CEMETERY. SB540 D. Wallace TO CREATE A SALES AND USE TAX EXEMPTION FOR CERT…”
|
TO CREATE A SALES AND USE TAX EXEMPTION FOR CERTAIN ITEMS RELATED TO HUMAN BURIAL; … | D. Wallace | Sine Die adjournment |
|
SB541
· 1 mention in agenda
Matched: “…TAX EXEMPTION FOR CERTAIN SALES TO A CULTIVATION FACILITY. SB541 D. Wallace TO CREATE A SALES AND USE TAX EXEMPTION FOR CERT…”
|
TO CREATE A SALES AND USE TAX EXEMPTION FOR CERTAIN ITEMS AND SERVICES SOLD TO … | D. Wallace | Sine Die adjournment |
|
SB566
· 1 mention in agenda
Matched: “AGENDA (Revised 4-3-23 @ 7:46 AM) Added SB394 and SB566 Senate Committee on Revenue and Taxation Monday, April 3, 2…”
|
TO AMEND THE LAW CONCERNING THE SALES TAX APPLICABLE TO SALES OF PARK MODEL UNITS; … | J. Bryant | Sine Die adjournment |
|
SB80
· 1 mention in agenda
Matched: “…NMENT OF BUSINESS INCOME; AND TO REPEAL THE THROWBACK RULE. SB80 C. Penzo TO EXEMPT FROM GROSS INCOME A GAIN BY A TAXPAYER R…”
|
TO EXEMPT FROM GROSS INCOME A GAIN BY A TAXPAYER RESULTING FROM THE ACQUISITION OF … | C. Penzo | Sine Die adjournment |
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- October 6, 2026
Senator Jimmy Hickey, Jr
Unverified
0:00
all right we'll call the meeting to order uh the first item on the agenda is going to be sb 394. Senator Boyd, are you here? Yes.
We'll go straight down the list, and if the members can just be ready, let's just get all of our questions done and try to roll through. All right. If you would, please introduce
Senator Justin Boyd
Unverified
0:46
yourself. You're recognized to present SB 394. Thank you, Mr. Chair. Thank you, committee members. State Senator Justin Boyd, District 27. I very much appreciate the opportunity to be here today to present this issue before this esteemed committee. Senate Bill 394 addresses two challenges that we have in the state of Arkansas for motorboat dealers.
Number one is they have to collect sales tax at the time of purchase. So just like if you were going into any other retailer where they collect sales tax, not any other, most retailers, they have to collect sales tax. So they might sell $100,000 or $100,000-plus boat, and they're responsible for collecting that sales tax, remitting it to the state, and making sure that they follow the appropriate formulas so that they do it, dot all their I's, cross all their T's, or they could wind up with a penalty if they don't do that correctly.
Then secondarily, there's another challenge that this bill seeks to address, And that issue is there are some, I'm just going to refer to them as rogue social media sites where they are selling, you know, they're using the, quote, person-to-person tax exemption on used boats so that they can align buyers and sellers, but then those buyers and sellers don't have to deal with the sales tax collection. So in a nutshell, what this bill does, it's very simple, is it creates parity with cars.
So the way it's drafted, it's set up to be identical with exactly how cars work, new cars, used cars, and that's what it does. Because of that, because it gets rid of that loophole in the road website selling, it does have a positive revenue impact. So that said, I'm happy to try to answer any questions. Members,
do you want to have any questions?
Senator Petty. Just to be
clear, this is not a new tax. This is just closing a loophole for
Senator Justin Boyd
Unverified
3:01
essentially the bad actors. Well, I'm not entirely accurate, so let me make sure I'm very clear on that. It would cause you to have to collect tax at the time of registration. So it would cause person-to-person boat sales to be taxed, which is what closes the loophole.
So some could argue that that's a new tax. But otherwise, as far as the amounts, it has complete parity with car dealerships. So up to $4,000, there is no sales tax. the $4,000 to $10,000,
Speaker 21
3:38
there's less sales tax, and then $10,000 and above. Anyone else
Speaker 23
3:48
have any questions? Senator Dees. Thank you. Thank you, Chair.
Senator Tyler Dees
Unverified
3:54
Senator Boyd, could you talk through the impact? Just make sure
Speaker 25
4:00
I'm reading it correctly on the DF&A impact on the estimations? Yes. So
Senator Justin Boyd
Unverified
4:06
you break it down and there's the total approximate local city and city and county sales and use tax and then the sales tax. And so again, because you're collecting more money. I mean, I had, I'll be honest, I'd asked for an amendment to this bill,
but it's not here. So I can't really talk about that. Well, we just looked at new boats because we're selling more, more boats are being sold outside of the state of Arkansas than in. Like if, I don't want to misquote, but it was like 10 to 1, and so I think some of that is being in here. So, you know, regardless of what happens today, I hope that we continue to look at this issue
Senator Tyler Dees
Unverified
4:49
because I think it's an area where we can seek improvement. So this 1.1 million dollar number, is that where you're referencing the approximate local city and county sales tax?
Increase, yes. It would be a net gain by changing the
Speaker 27
5:01
way we're doing this. Thank you. Thank you. I appreciate the questions. So I guess
Senator Jimmy Hickey, Jr
Unverified
5:10
I have one too, Senator Boyd. So just on the green sheet here,
and I mean in the bill, SB 394 provides that both new and used motorboats have a sales price less than $4,000 and are exempt from sales and use tax. so
it's that so that's where you're talking about this the same as where we're at with the
with the with the cars yes but that's
but that's not transpiring right now is that correct or i mean there's just i there's not there's not any sales tax
Senator Justin Boyd
Unverified
5:43
on those anyway right now is that correct there
there are on i mean my understanding this there are on boats but this bill would set it up so that boats have complete, motorboats, not boats, but motorboats have complete parity with how cars and trailers are done. So the way it was drafted is it's supposed to,
this bill is supposed to mimic exactly what's going on with cars and trailers. so have you got
Senator Jimmy Hickey, Jr
Unverified
6:12
any feedback from like the the boat dealers for lack of a better word so
Senator Justin Boyd
Unverified
6:19
to my knowledge there is no organized group that represents boat dealers and so i
i filed a bill like the very first day of session i withdrew that i worked with dfna got this one drafted
and it's been filed for a while. I've had no feedback from anyone on it. And so I can't say that I represent all boat dealers or I don't represent all boat dealers. I just know that I filed a bill and I'm doing that because I understand the challenge that one of my boat dealers has expressed to me. And they really want parity with cars and they are concerned about these, again, rogue social media sites that, you know, in essence are sellers, but sales tax isn't being collected, you know.
Senator Tyler Dees
Unverified
7:07
And that's an advantage to buy from them rather than to buy from a used boat from the motorboat dealer where you'd
Speaker 43
7:20
have to pay the sales tax. Okay. Senator Blake Johnson. So you take the
Senator Justin Boyd
Unverified
7:26
motor off the boat, what happens? That's a good question. They're motorboats. So, I
Speaker 43
7:32
mean, presumptively, I mean... There'll never be another boat sold in Arkansas with a motor on it.
Senator Justin Boyd
Unverified
7:37
Well, we can talk about that. I mean, you know, do you want me to have someone from DF&A try to answer that specifically? Just a question, yeah. Okay. I mean, it's a good question. And we come up.
Senator Tyler Dees
Unverified
7:55
And Mr. Gehring will try to address that so that we have a better answer than the one I'm giving you. Mr. Gehring,
Senator Jimmy Hickey, Jr
Unverified
8:04
if you just recognize yourself when you get to the table.
Speaker 53
8:14
Thank you, Mr. Chair. Members of the committee, Paul Gehring with DFA. As the bill defines a motorboat, we already have a specific statutory definition of those types of vessels that would be categorized. So if you do buy a motorboat, it's subject to having a certificate of number, which is the registration requirement in Arkansas. But there are also boats such as kayaks, canoes, things of that nature that would not fall into the definition of a motorboat,
that does not go through this process. So we would not perceive that as an issue in this. If there was a motorboat that was sold, it still would be required to have a title, a certificate of number, and under this bill it would also require the sales tax to be paid at the time the certificate of number and title is
Speaker 55
9:09
issued. Senator Johnson. So I get it with the
Speaker 57
9:15
inboard motor, but outboard motor, you sell it without the motor,
Speaker 53
9:19
and then you sell the motor. Yes, I'd be happy to go back and look at the specific definition, but it would not be my conclusion that a boat that can be equipped with an outboard motor would be able to be exempted from this tax being sold at the time of registration under this bill. Thank you. Yes, sir.
Senator Jimmy Hickey, Jr
Unverified
9:47
so just just one more so right right so it doesn't have
a negative fiscal impact as a positive fiscal
impact so more money's coming in so in the end the consumers are the one that are going to have to pick this up is that correct or is it just because somebody's doing what they're they're doing things they're not supposed to do could you could you just
Speaker 52
10:12
explain to me that part i want to sure i fully sure sure and we um and we met with um
Speaker 53
10:18
senator boyd early in the session to work on this legislation and the revenue impact it is it is a there's a lot of variables and information that we drew upon uh and it was correct that the the far majority of the boats the new motor boats
that are being um titled in our state are coming from out of state sellers um approximately about 1 in 10 are Arkansas sellers versus out-of-state sellers. So to give you a breakdown of the revenue impact, if we were to treat new motor boats like we treat motor vehicles, we currently do not give you a deduction from your gross receipts or your purchase price for a trade-in. What happens with
the trade-in, though, when the retailer sells that used boat that was traded in, they don't collect sales tax at the dealership for the used boat, but on the sale of the new boat, the entirety of the sales price is subject to sales tax. So if we were to treat sales of new boats like we do with new cars, by allowing that differential for the trade-in to come off of the purchaser's sales price, like we do for cars, would cause a revenue impact of about $1.7 million less.
But if we were to allow for used boats to be taxed like used cars are taxed, where if you have a vehicle that's purchased between four and 10,000, has the reduced rate over 10,000, has the full six and a half rate, that's where the gain is resulting. Because right now, a used boat, if I sell you my used boat, that's not, that is what's known as an isolated sale in our Arkansas sales tax law. DFA is not collecting tax on that sale. But under this bill, like a used car, if you had a used motorboat that was brought to DFA for their certificate of number,
sales tax would be collected under this bill, and that's where the revenue gain occurs. The revenue gain for the used boats is approximately $9.5 million, so the net result for a full fiscal year is the $7.8 million figure. so does in addition to
Speaker 52
12:29
all that so is it is it making it more consistent that
Senator Jimmy Hickey, Jr
Unverified
12:35
that an out-of-town dealer or an out-of-state dealer excuse me there by if we pass this bill then that's going to make them more consistent with what's happening in state am i missing that i think you i think you're
Speaker 53
12:52
just like motor like car dealers you would be able to as a as a buyer and an Arkansas resident, you could go to other states to make a new boat purchase. When you made that new boat purchase in the other state, you wouldn't have them collect sales tax, but when you came to Arkansas, you would either pay your sales tax or use tax at the time of, so there would not be, that would have removed the incentive to try to find a boat outside of the state where there wasn't any sales tax being collected on the new boat transaction.
Okay. All right. Senator Patey. So it sounds like it's an organized circumvention of the system. Do we have limitations on the one-off? If I want to sell my boat to Senator Hickey, that's one thing. But if I want to sell my boat to Senator Hickey, I want to go another one, and I sell one to Senator Payton, and then I go get another one, and I sell it. Are there limitations to kind of make sure that I'm really not a dealer in disguise,
Speaker 68
13:54
or how do we address that? And certainly, when
Speaker 53
14:00
we talked to Senator Boyd earlier in the session, that appears to be the big problem or one of the big problems for the new boat dealers is that market where you have, they're either online or individuals that are acting as intermediaries and not as sellers. So yes, we were made more aware and educated on the issue after the meetings that we had.
with Senator Boyd and his constituent. We certainly want to make sure that the tax is properly collected on boat transactions because right now, if you were to buy a new boat from an Arkansas dealer, the tax is going to get collected. But if there is a person that buys a new boat in another state and sales tax was not collected and then somehow an individual here in Arkansas has a brand new boat, they have a title for it but now it's perceived as a used boat that that boat's not going to be
collecting sales tax so we always have to identify issues like that with our with our audit team and make sure that people are properly registered to be dealers and to collect the tax where it's appropriate but it is it is a challenge for us just like it's a challenge for the the dealers that are trying to compete with these types of businesses. Yes, sir. Senator Payton. Thank you,
Senator John Payton
Unverified
15:26
Mr. Chair. Sorry I came in late if you've already answered these questions.
I apologize. So this exempts new boats under $4,000? That's correct. So kayaks, flat bottoms, canoes? Only
Speaker 72
15:38
motorboats. Only motorboats would be exempt. Those other types of non-motorboats, those would be, those sales tax
Speaker 53
15:45
would be collected at the point of sale at the sporting goods store. So like a canoe or a flat bottom
Senator John Payton
Unverified
15:52
that can have an engine put on it. I mean, normally those engines are, you know, swapped around and traded tiller handle engines like crazy.
So a new flat bottom or a new canoe that's capable of having a transom with an engine
Speaker 53
16:10
would be exempt from sales tax. If it fit the definition of the motorboat in the law. Now, what we did in looking at our data, we did not find any motorboats that fit the definition that were under $4,000 in terms of the transaction data that we had. So anything that fit the definition of a motorboat, we were not seeing that in our data that there are any motorboats that are priced $4,000 or less.
Speaker 68
16:35
I'm not saying it's impossible. To where do I find the definition of a motorboat? The definition for motorboat is
Speaker 53
16:42
as provided in the motorboat registration statute. It's not specifically stated in the bill, but it references it as it
Speaker 72
16:48
currently exists in Arkansas law. Okay, thank you. Yes,
Senator John Payton
Unverified
16:54
sir. I do have a follow-up. Yes, sir. A lot of boats are not registered. How
Speaker 68
17:02
do we address that in the bill or elsewhere?
Speaker 53
17:05
Sure, so a law change that was enacted in a prior session, I believe it was in the 19 session, required that all new motorboats be titled in Arkansas. So there currently is that requirement for new motorboats to be titled within our state. Certainly there are going to be used motorboats that do not have a title or a certificate of registration. So there would, but this bill would require
when that individual comes to register their new or used motorboat and get a certificate of number to pay sales tax at the time of registration. And they wouldn't get a title if it was a pre-2019 manufactured boat, motorboat, but if it was one that currently is subject to the title requirements when they want to transfer that title to the new owner, they would have to pay the sales tax at the time of the title transfer
Senator John Payton
Unverified
18:10
and getting the certificate of number. I think what I'm liking is that definition of motorboat. So I'll try to look that up. Thank you. Yes,
Senator Jimmy Hickey, Jr
Unverified
18:31
sir. Any other questions on this? All right. Is there anyone in the audience who wishes to speak for this bill? Is there anyone here that wishes to speak against this bill?
Senator Justin Boyd
Unverified
18:43
You want to close, Senator Boyd? Yes, sir. Thank you again for the opportunity to
hear this bill. This is an important issue that it's worthy of discussion here in our state Senate, and I hope that you will give it due consideration. and with that, I'm closed. Thank you. Okay. Is there a motion from the committee?
Chair (Senator Jimmy Hickey, Jr)
Unverified
19:14
Is there a motion from the committee? Senator Petty makes a motion. Is there a second? Senator Crowell, did you make a second? All right, we have a motion and
Senator Jimmy Hickey, Jr
Unverified
19:24
a second. All in favor say aye. Aye. Any opposed? No. I'm going to rule that it fails. Thank you.
All right, members, we're going to go to Senate Bill
441, Senator Wallace. Mr. Chair, you want to recognize yourself, please, sir. Sir, Mr.
Speaker 87
20:11
Chair, committee members, Senator Dave Wallace, District 19. Members, the purpose of Senate Bill 441 is to simply clarify a timing and paperwork issue
that deals with sales tax compliance. There is no revenue impact, and I've got revenue impact statements here if you all don't have them. 2017, we passed a bill, Act 465, that phased in a complete exemption to include partial repayments and repairs related to the same machinery and equipment used directly in manufacturing.
This phase-in exemption made Arkansas more competitive with other states for investment in our industries. And as a result, we're seeing more and more industries come into the state of Arkansas, to include recently another steel mill that's going to employ 700 people that should be up and running by 2024. Now, in practice, this exemption is straightforward. And repair parts, if we use them immediately when we get them and are used immediately,
we don't have a problem with this. But if we receive parts and put them in inventory, the problem that the manufacturers have is they have to declare a tax compliance, they have to declare that part immediately, not knowing if they're going to use it or not use it. All this bill does is simply say that going forth that when we buy a part, when the manufacturers buy a part, the tax decision for compliance is created when the part is pulled out of
Senator Jimmy Hickey, Jr
Unverified
22:00
inventory or when it is used. And with that, I stand by for your questions. Hey, any of the members have any questions in regards to this? Anyone in the audience want to speak for or against the bill? You want to close, Senator Wallace? Sir, I am closed. All right. What's the will of the committee? Okay, we have a motion do pass by Senator Dismayne, second by Senator Blake Johnson.
All in favor say aye. Aye. Any opposed? It passes. Thank you, sir. Thank you, committee members. Okay, Senator Dismayne, you're going to be recognized to present SB 478, if you'd
Chair
Unverified
22:44
just recognize yourself at the end of the table. All right,
Senator John Payton
Unverified
22:49
thank you, Mr. Chairman. Senate Bill 478 does not have a revenue impact. It does two things predominantly. Number one, there's two components to the ports, public and private. There's a program right now for the publics.
It's separated into two parts. It's going to combine that. It utilizes various funds. I think it's $2.55 million is what that public portion is. It's enabled to create some parity. This also establishes a tax credit for the privates. That credit is capped at $3 million per entity, 10% per year for that entity with a nine-year sunset. The whole program for that, the most credits that can be taken in any given year
is $2.5 million, and again, it has to go through ADC to prove that there's a net benefit to the state before those credits can be allowed, but without doing that, we still have the public, and there is a parity issue with the private ports. Any
members have any questions on this? Senator Payton, you're recognized. Thank you. So what kind of projects do we know are on the horizon or are in the past?
We don't. I don't know personally. Now, Commerce may have some that they could point out. I think they're here. I mean, Bruce Oakley, obviously, would be a private entity that may have some interest in doing something. But as far as specific projects, I do not know. And again, any project that we do have will have to go before AEDC and proven to be cost effective for the state. Thank you.
Senator Tyler Dees
Unverified
24:37
Senator Deese. Thank you, Mr. Chair. Senator, just being on the revenue impact statement, it says $2.5 million effective tax. And then there's a statement that says, would not be issued, would not be, no tax credits would be issued to taxpayers unless the project is determined by the AEDC to have an economic benefit. I'm just unfamiliar with that process on the economic benefit determination. They're going
Senator John Payton
Unverified
25:04
to do an analysis. So someone would have to create a project, create the presentation before AEDC.
AEDC is going to prove that there's a net revenue benefit to the state, so it can't cost us more than. And you see that in the way that it's structured. So it's $3 million, again, per entity, 10% per year, 2.5% annual cap, and it has to be in the carryover is only allowed for nine years. Okay. Thank you. And if I
Senator Jimmy Hickey, Jr
Unverified
25:31
remember all that's in statute or rule on how they're supposed to do this cost-benefit analysis, is that correct, Senator? That's right.
Anyone else? All right. Does anyone want to speak for the bill in the
audience? Anyone want to speak against the bill? You want to
close? Close. Close. Will the committee? Senator Petty. Will we have a discussion on the motion? We can. Yes, sir. Senator
Speaker 101
26:02
Petty makes a motion. Do we have a second or do you want to have discussion now? All right. Let's have discussion now. Go ahead. Senator
Senator John Payton
Unverified
26:10
Payton. Well, I mean, I don't know how many of these grant programs we have,
nowadays, economic development, we have quick action closing fund, we have all kinds of money set aside to pick winners and losers when it comes to businesses and investment in Arkansas, and we can't seem to find any money to relieve the taxpayers of Arkansas other than hopefully there's still income tax cut coming. But, you know, when these economic impacts are measured,
they take all of the income tax that's going to be paid by whatever employees, whatever jobs are going to be created. Well, those employers are competing with other employers that need to hire individuals. and our unemployment rate being very low, sometimes it's difficult to hire individuals. So I just,
I can't vote today for another grant program. Thank you. Thank you, Senator Payton.
Any, Senator Dismay? And as far as the grant program, that only pertains to something that's already existing. Again, it's going to combine two grant programs into one and also I think the limitation currently is just for the Arkansas River, and this opens it up to all navigable rivers in the state. So the grant program, regardless of what we do, will still exist. The secondary component of that is for the private ports. And again, there's a parity issue that we have because we allow these grant programs to be used for our publics, but not the privates. Again, this credit would have
to be measured. And to be honest, it's one of
Senator Jonathan Dismang
Unverified
27:53
the things I think gets us to being able to provide additional relief to arkansans in the future so just
Senator Jimmy Hickey, Jr
Unverified
28:01
just to put this out there a little more we've already got legislation in place that already has this cap there so as you've stated before i mean this has actually already been factored into our current forecast up to the max anyway and we're not going over that max with this with this legislation so anyway any other any other questions now i asked anybody in the audience want to speak for against i've seen
somebody had signed the sheet but since you didn't raise your hand i guess you're good all right all right okay so we've we've had a motion by senator petty petty we have got now have a second by senator crow all in favor say aye any opposed all right it passes I'm going
Chair
Unverified
28:43
to do 1454. All right. Senator Disming, you'll be recognized to present House Bill 1454. I mean, I think the easiest way to summarize this,
Senator John Payton
Unverified
28:52
you have single member LLCs or LLCs that are only owned by the husband and wife for the sole purpose of, you know, owning their home and their principal residence.
And that's done during, you know, estate planning, essentially. This would just allow that same treatment that we give to a revocable or irrevocable trust in regards to those homestead tax credits to those that have the LLC that have to go through and prove out that that's, you know, in fact their actual home, but it just allows that same status to carry over. We already do it again through some of our trust. Any questions for the member on this, members on this?
Senator Jimmy Hickey, Jr
Unverified
29:31
Anyone from the audience want to speak for or against? Senator Disman, are you closed? Closed. Do I have a motion? Motion do pass. Motion do pass by Senator Payton. Second. Second by Senator Dees. All
Speaker 101
29:45
in favor say aye. Aye. Okay, that passes. I'm going to run by 49. Why don't
Senator Jimmy Hickey, Jr
Unverified
29:56
you wait? Is anybody here to run House Bill 1627? No. Senator Hill.
Senator Ricky Hill
Unverified
30:12
Senator Hill, would you please recognize yourself? Senator Ricky Hill, District 11. You can start when you're ready. Thank you, Mr. Chair. Committee members, the main issue with this bill, We're just actually trying to codify what DFMA is already currently doing with the part pertaining to hunting and fishing clubs in the state of Arkansas. We're going to codify that, so not be backed up on at a later date and try to start taxing memberships on that.
Speaker 109
30:47
You didn't have an amendment on this bill? No, sir.
Senator Ricky Hill
Unverified
30:55
No amendment. this bill passed through the house 90 96 uh with 96 votes okay it was
Senator Jimmy Hickey, Jr
Unverified
31:03
my understanding just it was my understanding there was going to be amendment maybe by the house sponsor uh is what i thought because we were going to stipulate that this was just for the membership and in no way
included the uh if there was a hotel or a restaurant on
there that it didn't exempt those have you heard about that or no sir
Senator Ricky Hill
Unverified
31:21
I have not have not he was actually here just a while ago the house mayor was he had to run to the house
present a bill as far as this goes you know as far as memberships to a to a hunting or fishing club most of the time that they have a have
a facility where when you buy a membership you can stay in if you want to do you mind if
Senator Jimmy Hickey, Jr
Unverified
31:44
I have Mr. Goering to come? I would love for you to. Mr. Goering, if you don't mind,
I know we've had discussions this weekend or whatever. After Mr. Guarantee,
Senator Ricky Hill
Unverified
31:51
I've got someone I'd like to call up. Yes, sir. And I will say that Mr. Guarantee and them did not go to the House and speak for or against this bill. Right. Well,
Senator Jimmy Hickey, Jr
Unverified
32:04
this was just, this was discussions that I'd had with them over the weekend, but there's been so many I wanted to make sure. Is this the Is this one of the bills that
Speaker 52
32:11
you and I discussed? Yes, this is the bill that we discussed. I did provide the proposed amendment to Representative Moore,
Speaker 53
32:18
but he was concerned about the time left in the session, but I'm not aware if he intended to put the amendment
Speaker 52
32:30
on the bill or not. Okay. And the amendment that was there, which I think was on another bill, exactly what
Speaker 68
32:37
it did say. Sure. So what the amendment clarified was
Speaker 53
32:41
that if the gross receipts that are imposed by Arkansas law that are paid to obtain access to land for the primary purpose of hunting or fishing would be exempt,
Speaker 68
32:54
but you would have to separately state any other charges for the sale or lease of goods or services that are subject to gross receipts tax levied by the Gross Receipts Act, or any special excise taxes that
Speaker 53
33:12
are levied under Arkansas law. That would address the issue if there was a business that was selling hunting or fishing membership fees, but they
Speaker 68
33:21
also had on their premises a lodge, a restaurant, food service, rentals of property that was available,
Speaker 53
33:31
but you paid one fee to get access to everything, just to make sure that the law didn't try to extend to all of those other existing
Speaker 68
33:39
and taxable services under our existing law. Right. Can I comment to that? Senator Hill, I apologize.
Senator Jimmy Hickey, Jr
Unverified
33:49
I was just the House member who was dealing with me. I didn't even know you were carrying this bill. Yeah, I would like to
Senator Ricky Hill
Unverified
33:57
respond to that, though. We're saying that these guys are not wholesalers. They're actually paying their taxes on their shelves, on their food, their beverages, and everything else when it's purchased.
These guys are not a registered wholesaler, which I think changes totally what Mr. Guarantee says. If
they had a wholesale license, that would be a different story than what I'm showing here.
Senator Jimmy Hickey, Jr
Unverified
34:21
Here's the thing. I want to make sure we don't have any confusion for these taxpayers out here. So the way that you all
have it written up shows no fiscal impact, which is what we've been trying to be consistent with in this committee. So you all have actually looked at it that those exemptions are not going to apply to the,
Speaker 52
34:43
if somebody had a motel or a restaurant or whatever, is that correct? And so
Speaker 53
34:49
when we prepared the fiscal impact statement, And currently, we would not assess for the privilege of having access to rural land in order to hunt or to fish. The issue is, in Arkansas law, is that if you provide a non-taxable service, which this is a non-taxable service, but you also, within that payment of those dues or the membership fees or admission costs,
If you also add a taxable service or good, such as the providing food service in the form of catering, prepared meals, or just groceries that you stock a cabin with, or you provide lodging in the form of a cabin, hotel, or if you have tangible personal property that you're providing, then if you combine those with a non-taxable service, that makes the entirety of the transaction taxable.
That's how existing law works. After the bill was presented on the House side, I think we were all in agreement, but then we had further feedback that we wanted to reach out to the sponsor and make sure that we weren't creating an ambiguity in Arkansas law with this bill. If
Senator Jimmy Hickey, Jr
Unverified
36:15
you don't mind, if you'd recognize yourself, because I think you're who I've been dealing
with. Is that correctly on the House end? Yes, sir. Jeremiah Moore,
Representative Kendra Moore
Unverified
36:26
representative district 61. Sorry, I had to run over here from a House committee meeting. So
Senator Jimmy Hickey, Jr
Unverified
36:33
I guess the thing is, and I know we're whatever at this point in
time, So it was my understanding that it was never going to be your intent that there was a motel or food items or
whatever that those would be exempt. Is that correct? No, sir.
Representative Kendra Moore
Unverified
36:53
Motel, any singular ticket items. Listen, from my perspective, I represent five super rural counties with full of duck clubs from small little duck clubs to big multi-thousands of acres. And my intent is, if you get a group of guys together that go in and purchase a piece of farm ground or a piece of hunting ground, and they charge annual membership dues for purposes
like to pay their taxes, to pay liability insurance, to pay for a tractor, to pay for diesel, to pay for flight bills, et cetera, those dues that they pay annually for these hunting gloves shouldn't be taxed. And this is simply a clarifying statement or codifies current existing practices by the Department of Finance and Administration. Okay, but it was my understanding that you were okay
Senator Jimmy Hickey, Jr
Unverified
37:48
if we were going to put an amendment on. Was that not correct? So, Mr. Paul
Representative Kendra Moore
Unverified
37:54
Goering reached out to me just this morning.
Chair (Senator Jimmy Hickey, Jr)
Unverified
37:57
I asked him to from discussions that we've been having over the weekend or whatever with a whole bunch of stuff.
Representative Kendra Moore
Unverified
38:03
Gotcha. Well, that was about the first time this morning that I'd heard about it. And if we'd had a chance to amend it on the House side, because I asked DF&A back, gosh, a week or two ago, when we passed it through the House, if they were fine with it, and they said they were fine with it. So it was my understanding that up until this morning, there was a green light.
Speaker 52
38:32
ask some questions. Senator Deese. Thank you,
Senator Tyler Dees
Unverified
38:36
Mr. Chair. From here in this discussion, I see twice in the bill where it uses the phrase access to land for the primary purpose of hunting and fishing. And that puts me at ease from knowing that it is directed at the membership dues and not for an extension of a potential of lodgings and other items.
Would you agree that primary purpose of hunting is listed twice, reinforces that? That's only what we're talking about
Speaker 68
39:13
here today? Thank you, Senator. When we reviewed the bill, we certainly had that level of
Speaker 53
39:20
comfort. But after the bill ran on the House side, I was contacted by one of the sponsors on Friday to discuss the bill with a question of,
would this now affect an audit that was previously performed by DFA that's currently in litigation? And I said, no, it would not. I agree absolutely with Representative Moore that if you have a group that has a common ownership of a piece of property and they have to charge dues to maintain that property, obviously that's covered by this bill. But if you have a business that doesn't have this common ownership, that they are actually seeking customers to come to this property for the access to the hunting and the fishing on the property, but you're also providing them with a restaurant, food service, lodging, hotel, just like a hotel would be offering.
under Arkansas law, you would be combining a non-taxable service with a taxable service, which then would make the entirety of the transaction taxable. And we didn't want that to be the result. So we had this draft language for the amendment prepared and to share with the representative. Of course, that conversation that occurred on Friday, a lot happened between Friday and this morning in central Arkansas. I don't want to blame that issue, you know, that for the, because we had a
level of comfort. We also had a talk with the sponsor, with Senator Hickey, in last Thursday's meeting. I thought we all had an understanding of what the bill was going to do, but. I
Senator Tyler Dees
Unverified
41:02
appreciate that description. I guess maybe I differ on the worries of the what-ifs of the what-ifs. Today, hey, we can help taxpayers with this description about primary purpose. And maybe if we did have more time in a session, we might do that. But I guess I find the concern that I think we have a majority of what we're worried about,
if not all, twice listed here with the
Speaker 63
41:29
word primary. And perhaps if we just had
Speaker 53
41:33
clarity within committee that this bill would not make a membership to a hunting or fishing lodge that provides lodging, provides a hotel, provides food service, provides tangible personal property within that fee and you get access to all of it and would make the entirety of the transaction exempt.
That's the issue. And that would be the question that we would have. And that's what we were trying to address by making it clear in the amendment that if you do provide those taxable, tangible personal property, accommodations, or other services, that those would continue to remain to be taxable, the membership would not be taxable. Thank you. I want to
Senator Ricky Hill
Unverified
42:19
say something online with what he just said. We can what-if this bill to death. What he's
referring to would be a totally different bill than what we are presenting
today. What we are presenting today is just simply straightforward. Membership dues are paid to hunting and fishing clubs that are paid to obtain access to land for the primary purpose of hunting and fishing. That's the membership access. Now, if those memberships actually own a lodge on there, they are members, they have paid for that. They're paying their taxes, they're paying upkeep, they're maintaining. That's what we're looking at today. And when they go out and put food in the shelves,
they are paying their taxes at that point. If they buy shells, they are paying taxes at that point. They
are not wholesale dealers. Do you agree with that, Mr. Guaranty,
Speaker 64
43:10
that these guys are not wholesale dealers? Just to make sure I understand, if you have a group of individuals that own the property and the only individuals that are going to be on the property are the actual owners of the property,
Senator Ricky Hill
Unverified
43:23
yes, I agree 100%. If they have an LLC, they are members. The LLC owns the land. They are members of each one of them.
Speaker 53
43:31
That's totally separate. But what would be different is that if then the LLC then sells memberships to the general public. That's not what this bill is addressing. And that would be the purpose of the amendment is to make it clear that if the business is providing taxable services or goods or accommodations to non-members and individuals that are third parties to the general public, just like a hotel or another resort
would have to collect tax on those providing of accommodations or food service this type of business would also have to do the same thing that was why we wanted to make sure it was very clear
Speaker 68
44:17
of what the business's responsibilities were going forward for when they provide them to
Chair (Senator Jimmy Hickey, Jr)
Unverified
44:22
the general public not to the members it was a clarity clarity issue was what it was Senator Payton You're in line. And then Senator Johnson and Senator Dismay. Senator Payton, you're recognized.
Senator John Payton
Unverified
44:34
Thank you, Mr. Chair. I don't know how to make this short. I mean, I'm thinking the AAA that does roadside assistance, AARP that has all kinds of membership perks. I mean, I think there are a lot of different memberships out there that you may pay dues into that offer taxable incentives. and I'm not sure that DF&A is pursuing that, I would agree with other members. The language in this bill specifically says membership dues.
It specifically says to obtain access to land for hunting and fishing. If they're running a motel, I would think that DF&A would have all the authority in the world to make them split out their membership dues that are for obtaining access to land separate from their accommodations in the hotel or even their meals. As Senator Hill pointed out, I mean, if they supply clay targets and shotgun shells,
I mean, that's going to be something they paid taxes on when they bought it at wherever, Bass Pro or wherever they bought it. So are we, is DF&A pursuing
all the other memberships that people pay membership into? Are they
Speaker 68
45:57
pursuing a division of those dollars? If there is a sale of, for example, a warranty agreement that provides for a taxable service,
such as a repair of your vehicle. So I'm very familiar with that. Yes, sir. But that's
Senator John Payton
Unverified
46:14
not what AAA is. I mean, AAA will come out and change a flat tire on the side of the road. In the real world, that wrecker call and that flat tire being changed would be taxable, and as far as I know, when
Speaker 68
46:36
not taxed. So can you explain that difference? Sure. If there is an agreement that provides a taxable service to be performed, such as a repair of a motor vehicle, then the sale of that agreement is a taxable sale.
Senator John Payton
Unverified
46:52
So we collect taxes when people join AARP or AAA? If that
Speaker 68
46:58
agreement does provide for the sale of a taxable service, yes. You learn something new every day. Thank you. But there are several membership agreements that are not taxable in Arkansas. There has to be some type of taxable component to what the consumer is receiving as a part of the agreement. And that's why just that level of clarity is what we're suggesting,
is that if you are competing with another business that is collecting tax on their rental of accommodations or their food service or anything else that's currently taxable, we just suggested that it would be helpful to be very clear that you separately state those taxable services from your non-taxable
Speaker 53
47:45
service to avoid a potential issue down the road, potentially with an auditor. Senator Blake Johnson.
Speaker 55
47:55
Seems like this is getting convoluted between a guide service and a membership to a hunting club. A guide service provides those things that you're talking about, room and paid hunt and whatever you're talking about. But what this bill clearly defines membership dues in a hunting club is a totally different thing than a guide service.
If you've got definitions for guide services and taxable service, we do
Speaker 53
48:31
not have a definition for guide service and I think absolutely that is not a taxable service, providing guiding for hunting or fishing. The issue that comes up, and we talked, Senator, I'm sorry, Representative Moore and I kind of walked through this a little bit this morning, if that guide service, the best practices would be if the guide service also included some other things that are currently taxable like providing accommodations
or providing meals, the best practices would be that just separate those line items out on the customer's receipt. Like guide service, completely exempt, but if there was going to be accommodations that's going to be provided, food service that's going to be provided, make sure to itemize those on your invoice so that you don't run the risk of the entire transaction being viewed as a taxable transaction. It also would minimize the tax liability because you only want to collect tax on those line items on your invoice
that are taxable under Arkansas law, which would be the food service and the providing an accommodation for an overnight
Speaker 55
49:37
guest. That's happening. You can have hunt weekends and it has accommodations, has meals, and it has those guide services. That's not what this is. In my reading of it, it's clear. It's not what's trying to be commingled in this discussion.
Speaker 64
49:58
Oh, I agree, and that's, you know, Representative Moore and I were, when
Speaker 53
50:03
we spoke this morning, and also the conversation that we had last week, we certainly don't want there to be misunderstandings in our statutes, because once they get signed into law, they'll be there until they're further amended by the General Assembly. I'm 100% in agreement that if there's a group of individuals that want to have a common ownership of land and they want to collect dues so they can maintain the property for the member's use,
non-taxable, that's what this bill says. But if that same entity then provides that out to the general public, like a hotel would or a restaurant would, they have to be sure to collect those sales taxes when they do engage the non-owners to operate a business to collect revenues from their customers the taxable services. If they haven't got sense enough to do
Speaker 53
51:01
And that's what we're trying to avoid is audit findings, just to make sure that the clarity and the sales tax laws is very crucial. Sure. Members, let
Senator Jimmy Hickey, Jr
Unverified
51:11
me say now, Mr. Gehring, he's done some of this at my request because, of course, I wanted to make sure there was not any fiscal impact because of the commitment that you know, we've made in here. So the thing is, is I was, I don't think that the bill had as much clarity as I would have liked to have seen. Let me just put it that way. Because if everybody's
sitting around this table, you know, saying, well, that's our intent, that's our intent, I didn't see any problem with not just putting it in there so that whenever some tax attorney picks this up, it's just as clear as a day is long. So that was my reasoning. So Mr. Gehring, And, you know, like I say, he's been very helpful with this, and I want to make sure we recognize that. Senator Dismang? Yeah, and I mean, I just want to
Senator John Payton
Unverified
51:55
make sure I'm following. I mean, it will most likely be interpreted the way that we think it's going to be interpreted.
The problem is going to be one day when someone charges, you know, an exorbitant amount for membership dues that includes all these other fringe benefits. At some point, you're going to break those out, and you're going to ask that, you know, entity. Again, we're not talking about just a local hunting club, but that entity to, okay, what goes into that membership due? Right. And there's going to be a piece of it that's going to be taxable, a piece of it's not. And if it's not delineated, then all of it will be taxable. Correct. I mean, it's not very much different than a health club membership due.
The equipment that you use at a health club isn't tax-exempt. Your electricity isn't tax-exempt from sales tax, but you pay sales tax on those membership dues. So your sales tax, sales tax, sales tax. I mean, it's not very much different, I don't think, than what we're talking about here. We're just saying the membership, sure, those are all excluded. Yes. Whenever the audit happens, and then, I mean, again, it's up to y'all. I mean, this is y'all's bill. It doesn't bother me either way. It's just you're going to have to make the argument of how does that break out in the future.
Senator Petty, you recognize, sir? So just, again, I'm trying to get clear like
everyone else. So basically in this situation, it would be incumbent upon the provider, whether it's Bass Pro Shop that gets creative or whoever the hunting club is, if they don't delineate it out, then under current law, which is not affected by this bill, all of it would be taxable unless they delineate out the charges for what they're paying. That's correct, sir. And so this bill wouldn't affect that, and it would then be incumbent upon,
and I would think they would be highly motivated to ensure that they are broken down on the billing or the due statement or whatever it's called. So I'm kind of like Senator Dees. I'm pretty comfortable with the intention here with where we're
at with the bill. any other any other questions of the from the committee okay I noticed that
Senator Jimmy Hickey, Jr
Unverified
54:17
we do have somebody here to speak for the bill from Spring Valley I can't read your name on here are you here okay thank you sir thank you mr. gearing is there anyone from the audience who would like to speak for the bill against the bill do you all want to close senator
Speaker 132
54:44
hill yes sir i'm letting representative moore start then
Representative Kendra Moore
Unverified
54:47
i'll finish up thank you sir committee thank you so much for hearing us out today you know this is just a really important clarification of an existing practice by dfna and i'm running it simply because i've got a lot of hunting clubs in my district it's a cultural part of our state and it's a way of life, and if you and your family want to get together with a couple other friends and purchase a hunting ground and pay annual dues, you shouldn't have the state interfere and try and collect taxes from that, and all this bill does is simply clarify it.
When this passed through the House, I went up to DF&A and I asked them, do you have any problem with this, and they said no, and we had an opportunity to change it then, and I'm personally very comfortable with this and I would be grateful for a do pass and a
Senator Ricky Hill
Unverified
55:44
yes vote. Thank you, Representative Moore. As you all know, hunting and fishing in the state of Arkansas is
a great deal. People come from all over the country to the state of Arkansas and they pay taxes here.
But what we're trying to do here is to make sure that people in the state of Arkansas, or they could even be outside, if they are owners of land, if they join a membership into property they own, that they are covered. They still pay their taxes whenever they go out and buy their shelves and other goods. All we're trying to do is just to make sure that it's codified from what DF&A says is currently good to prevent government overreach from trying to collect taxes when they shouldn't.
With that committee, I'd greatly appreciate a good vote.
Senator Jimmy Hickey, Jr
Unverified
56:32
Okay, what's the will of the committee? Senator Dees, motion do pass. We have a
second by Senator Blake Johnson. All in favor say aye. Aye. Any opposed?
Senator John Payton
Unverified
56:46
Yes, sir. I'm for passage just the way that it is, but I do think you all need to circle back up before you find someone that's relying on this law, you know, finds himself in an audit in a probably very uncomfortable situation. I do think that, I think DFA is telling you
there may be a problem at some point, especially if someone manipulates the way that the membership dues work. So just probably next session would be something to
Senator Jimmy Hickey, Jr
Unverified
57:08
look at. And I would echo that. Everybody around this table has said something. It's just going to be clarity or your taxpayer is going
to be the one that gets hurt. Because at this point right now, what's going to happen is this film, which is being live streamed, is going to be pulled back up and somebody is just going to say, why was there not more clarity in the bill to make it that way? If we weren't hopefully, hopefully in the last week
of the session, personally, I would have voted no on it. But with where we are and what you've said, understand that DF&A is, if those things come into place that they're going to do what they're supposed to do, you know, I'm willing to just go
Chair (Senator Jimmy Hickey, Jr)
Unverified
57:46
ahead with it. But I'm the same as Senator Disping. This one really needs a little more clarity if we could work on it at some point. Thank you,
Speaker 82
57:54
sir. So do we pass or fail? It's passed. Thank you, sir. Thank you.
Chair (Senator Jimmy Hickey, Jr)
Unverified
58:23
Senator Dismang, he told me that you had an amendment on this bill It would almost give me a heart attack
Senator Jimmy Hickey, Jr
Unverified
58:30
if I figured out what it was. He's going to pass out the amendment and then you'll be recognized to
Speaker 97
58:38
present SB 549. Actually, you'll be recognized to present the amendment. All right, members, Jonathan Dismanning, this is just an amendment to add co-sponsors in both the House and
Senator Jimmy Hickey, Jr
Unverified
58:47
the Senate. All right. Motion to adopt the amendment. Second.
All in favor say aye. Aye. Any opposed? All right. You're recognized to
Senator John Payton
Unverified
58:59
present the bill as amended. All right. Thank you. Members, the bill is very simple. I'm not going to try to overcomplicate it. It drops the top rate from 4.9% to 4.7%, and that makes that effective as the beginning of this calendar of the year, so 1-1-23. It also drops the corporate rate from 5.3% to 5.1% with the same effective date, 1-1-23. There is a revenue impact of roughly $100 million on the individual side ongoing, a revenue impact of $24 million ongoing on the corporate side.
And it does have the steps in place because we still have two tables. This bill does get us closer to being able to close and have only one table. All taxpayers that make above $24,300 will benefit. And it's just part of the ongoing work we've done in regards to individual income tax, where, of course, we have done substantial work for both low-income taxpayers and middle-income taxpayers in previous sessions. Senator Payton,
you're recognized. This is just curiosity more than anything, but why is the fiscal impact 186 first year and 124 second year?
Because it is retroactive to 1123. We have a substantial surplus being accumulated right now that will essentially, this will eat a portion of that surplus, but it's the fact that it's retroactive. I would, yeah, I'll just leave it at that. Got it. Thank you. Members, in addition to that, there should be one additional bill that you'll see coming before us. I think it'll be coming from the House, and that's in regards to the throwback rule related to corporate taxation. We've had some issues with various industries that have either contemplated leaving or have not settled in Arkansas because of what we have for throwback.
Again, I don't have the weeds on that, but it will be essentially a companion to build what we're doing here but was not
Senator Jimmy Hickey, Jr
Unverified
1:00:50
included. Sure. Everybody understand that. I mean, we kind of went back and forth on the throwback rule and how we were going to set it up. So it's just it's not inclusive of this. There will be another bill. So I just want to put that on everybody's radar. are. So any other questions? Anyone from the audience want to speak for the bill? Anyone want to speak against the bill?
Okay, you want to speak against the bill, sir? Yes,
sir. Yeah, yeah, you're welcome to come to
the table. And when you get there, if you don't mind, just identify yourself for the record, and then you'll
Bruno Showers
Unverified
1:01:30
be recognized to begin. Hey, everyone. My name is Bruno Showers. I'm the Senior Policy Analyst for Arkansas Advocates for Children and Families. You're recognized, sir. Thank you. Appreciate that, Mr. Chair, and everyone else the opportunity to speak today. So, as I was putting together my testimony, there wasn't yet a fiscal impact statement.
I asked our partners at the Institute on Taxation and Economic Policy, or ITEP, to model this for us. And they estimate that 80% of the dollars of this tax cut would go to the top 20% of Arkansans. That's about people making $110,000 annually or more. I briefly checked the fiscal impact statement. I didn't see this breakout, but I think that estimate basically would line up with the F&As. It's similar to what they estimated last year from the rate cut that we did.
you know, cutting the rate to $4.9 cost $450 million annually during the special session, and over $400 million of those dollars went to people on the top tax table. I think this would be a similar breakout. And the thing is, the high rates of inflation that we're dealing with mostly hit the 400,000 Arkansans that are left out of this tax cut. Those are people making less than the average. A lot of those would be the elderly, people with disabilities, and others that are on fixed income and that that that inflation itself is exacerbated by
our relatively high sales tax rates in our state. I think right now we have the third highest sales tax burden in the country and so you know our state's been running surpluses I get that I even the likelihood of a recession in the short to median term I think has gone down so I do understand that we have the revenue available to do this our issue isn't primarily about the impact on the the revenue collections but what other priorities could we address with that 125 million dollars in annual
costs you know just looking at other tax legislation most bills this year have been held because of concerns over the revenue impacts from them you know those are tax proposals that that could have helped address access to and the quality of our early childhood education system. We've heard from, that's a well kind of established way to address some of our workforce issues. We know that childcare is one of the barriers that workers are having issues addressing and that's one of the reasons we can't fill all the jobs
that we've heard about so many times this session. There's been other bills to address the rising costs of raising a child, diapers and formula, some things that would have made wheelchair-accessible vehicles more accessible for people with mobility issues. And really, the list goes on. And, you know, a lot of those bills had a much more modest price tag than this legislation would, you know, an order of magnitude or more, lower. And then, you know, that's without even considering things that have been proposed but not included into our budget, you know,
modest expansions to Medicaid coverage for new moms to address our high rates of maternal mortality. Again, a much more modest cost than this tax cut. And so, you know, I don't want to belabor the point, but all that to say that, you know, instead of another round of tax cuts that mostly accrue to the already well-off, we just think that that revenue could be used to address some of those longstanding issues in our state. And so that's why we oppose this legislation. Okay, thank you for your comment, sir. Yeah, thank you.
Senator Jimmy Hickey, Jr
Unverified
1:05:02
Anyone have any questions of him on the committee?
Thank you for coming down, sir. Appreciate you.
Chair (Senator Jimmy Hickey, Jr)
Unverified
1:05:16
Yes, sir. All right, not seeing anybody else to speak for or against the bill. You want to close, Senator Dismang? No, I'm closed.
Senator Jimmy Hickey, Jr
Unverified
1:05:25
All right. All right, we have a motion by Senator Crowe. As amended. Do pass, correct? Okay. Senator Dees is a
Speaker 151
1:05:34
second. All in favor say aye. Aye. Any opposed?
Senator Jimmy Hickey, Jr
Unverified
1:05:38
Congratulations. Thank you, Mr. Chairman. Is there anything else that anybody on the committee needs to bring before us today? Okay, we will, you're probably going to have to watch close. We'll have to probably have another meeting. I'm not exactly when that'll be, so we'll just have to kind of watch and be at the call of the chair. With that, we're adjourned. Thank you.
Agenda
CALL TO ORDER
REGULAR AGENDA
SB394 J. Boyd TO AMEND THE LAW CONCERNING THE COLLECTION OF SALES AND USE TAX ON MOTORBOATS; AND TO SUBJECT CERTAIN USED MOTORBOATS TO A SPECIAL RATE OF TAX.
SB441 D. Wallace TO AMEND THE SALES AND USE TAX LAWS CONCERNING EXEMPTIONS RELATED TO CERTAIN MACHINERY AND EQUIPMENT; AND TO ALLOW A SALES AND USE TAX EXEMPTION FOR CERTAIN MACHINERY AND EQUIPMENT PLACED IN INVENTORY.
SB478 J. Dismang TO PROVIDE ADDITIONAL FUNDING FOR THE ARKANSAS PORT, INTERMODAL, AND WATERWAY DEVELOPMENT GRANT PROGRAM FUND; AND TO CREATE A WATERWAYS INVESTMENT INCOME TAX CREDIT.
HB1454 Ray TO AMEND THE DEFINITION OF A HOMESTEAD FOR PURPOSES OF PROPERTY TAXATION; AND TO PROVIDE THAT CERTAIN DWELLINGS OWNED BY A LIMITED LIABILITY COMPANY QUALIFY AS A HOMESTEAD.
HB1627 J. Moore TO CLARIFY THAT MEMBERSHIP DUES PAID TO HUNTING OR FISHING CLUBS ARE EXEMPT FROM SALES TAX.
SB549 J. Dismang TO REDUCE THE INCOME TAX RATES APPLICABLE TO INDIVIDUALS, TRUSTS, ESTATES, AND CORPORATIONS.
ADJOURNMENT
Documents
| Title | Type | Pages | Source |
|---|---|---|---|
| Agenda — REVENUE & TAX - SENATE, Apr 3, 2023 | Agenda | 2 | Official source ↗ |
Speakers
Senator Jimmy Hickey, Jr
Unverified
Senator Justin Boyd
Unverified
Senator Jim Petty Chair
Unverified
Speaker 21
Speaker 23
Senator Tyler Dees
Unverified
Speaker 25
Speaker 27
Speaker 43
Speaker 53
Speaker 55
Speaker 57
Speaker 52
Speaker 68
Senator John Payton
Unverified
Speaker 72
Chair (Senator Jimmy Hickey, Jr)
Unverified
Speaker 87
Chair
Unverified
Speaker 101
Senator Jonathan Dismang
Unverified
Senator Ricky Hill
Unverified
Speaker 109
Representative Kendra Moore
Unverified
Speaker 44
Speaker 63
Speaker 64
Speaker 132
Speaker 82
Speaker 97
Bruno Showers
Unverified
Speaker 151