Revenue & Taxation- House

The price it for seventy four ninety five if I have room to it's gonna have the effect you're talking about baseball have it in the reverse they're gonna be trying to get under that the duty free price in their pricing because that's an advertising marketing plan there are plenty of price constraints in the car business we have book values that people can freely access online Carfax of values you have loan value that controls how much you can borrow the car then you have internet advertising you know it's really easy to grab your phone or your pad or anything and search the make a model and see who else has got what for sale within a hundred or five hundred mile radius there are plenty of price constraints on the car business that would just. Any dealer that would that would take this as an opportunity to to charge more would be out of business pretty quick. Thank you Russian miner give question Sir. President will give a question. The motion at the appropriate time thank you Sir member center questions. Paul you care to give us the FAA's version. Thank you Mr chairman and members of the committee Paul Garin department finance administration DFAT does have a current fiscal impact statement for house bill eleven sixty that should be in your materials for today's meeting I represent Payton did did cover the revenue impact with within his presentation of the bill. but I'll just go through the structure of the bill is that for you'll have a tax cut and that we would anticipate would go into effect on a nine one of twenty one. and then that would reduce The sales tax on the use motor vehicle and for purchases of seventy five hundred hours or less and would be exempt and then two years later that would be raised up to ten thousand dollars the first and fiscal year impact would be FY twenty two which would be nine and a half million the next fiscal year FY twenty three is representative Payton mentioned in his presentation is twelve point seven million that's the first full year that you have a revenue impact for the seventy five hundred change FY twenty four when you start seeing the effect of the threshold being raised up to ten thousand dollars on a use motor vehicle the fiscal impact is at twenty four point four million and then when the full effect of raising the threshold to ten thousand is a realized in FY two thousand twenty five we in the revenue impact is twenty eight point four million as was discussed in representa page presentation the governor in his balanced budget did provide for a used car sales tax change which would have a of reduced revenue impact the full year revenue impact for the governor's plan would be thirteen point one million dollars I did it would structurally NO were not talking about the governor's bill right now but just for purposes of comparison from this legislation there would be between the use cars with a price point of between four thousand and ten thousand there would be a three and a half percent reduced sales tax rate. which does a couple of things it brings the revenue impact down it also addresses the cliff effect of having to paw I hope my can allow you of course we're going to talk about I apologize but of course Wooster but certainly the but for purposes of the revenue impact revenue impact is is up more than half as as for compared to represent a patients bill Talk about the the cliffs on the seventy five hundred if you would verify the numbers. I saw approximately the the cliff on of course the the for the locals local sales taxes on the collected on the first twenty five hundred dollars so depending upon how much of city and county sales tax applies you would have a cliff effect there but the more pronounced cliff effect would be up on the six and a half percent state sales tax so if you multiply seventy five hundred that cliff effect time six and a half percent that's about four hundred and eighty dollars and then of course when you get up to ten thousand it's it's it's in the six hundreds. Was there any questions. Thank Paul thank you Sir thank you thank you. Resent paying everything your lead for you to the audience yes Sir thank you Mr. So he's he's totally correct of right the same numbers I have. The second step we have an amendment here if anybody needs it that would just stop at the seventy five hundred dollars to the first fiscal impact which is twelve point seven and it would amend the rest of the bill away to where did not take it automatically to ten thousand in two years just wanna buy no that's available. If it helps thank you thank you Mr thank you Sir anybody also speak against the bill. For the bill. President thank you will close for the bill. I'm close not ask for a good vote thank you thanks Sir members represent lessons has made a motion to do pass is that correct ma'am. As it was originally presented that to have a motion. This original bills anybody understand that because representative painted offer up an amendment so the immense not there so for the original bill seventy five hundred ten thousand accurate representation. That's correct thank you Mr yeah okay. I'm sorry what. What. So when she says as originally the is it talking about his bill with his house amendment number three that's correct okay I'm only verify that. As engrossed at number three members that amendment three as engrossed yeah your amendment three. Yeah yeah I mean that's the members is seventy five hundred step with the ten thousand cat that's what we're talking about here I understand. Right. Any other debate members. All in favor say aye aye opposed relates to pass the bill thank you welcome Sir. All rights reserved thank you would you care we take strict action can background you Sir cool thank you. Because I know revision of Lanny Fite just dying to get into the table. Members will take a look at House Bill fifteen forty six. Whizzer was chairman I have an amendment okay let's get to listen staff passed amendment out first before you start. So members about her this spot to a bill sponsor does have an amendment several past that we started. Zero have amendment have time to read over. In fact when you get ready service with. Okay thank you Mr. the Amendment I have here today is is you will not be codified in the in the bill but it's just showing our intent to fund Medicaid program in the future and that it is a priority to us as the legislature in which the to do that. I'll be happy to answer members heard explanation of the members amendment this is this bill is amendment as well so to any questions. I have a motion for adoption of amendment I have a motion doc about provisional wouldn't any debate all in favor say aye. The of proposed register you ma'am is adopted. Twitter okay I have a presentation about thirty minutes I have one about five minutes incidences Thursday and people need to go home and we've heard all the debate in the past over the at the last last month when we met I'll just move on to what we've done with the bill has been amended since last time you saw the bill and what it does it has put triggers into the into the bill one of the concerns of I heard last meeting was well what what if we don't have growth in the future what happens in and so we are placed in the story years two thousand twenty three twenty four and twenty five we a place triggers in their. It's is dependent on growth and what we did we took the last ten years and did an average and it came out to two point seven four percent growth so we're talking about the first year of being about two thousand six hundred and eighty one million dollars and would have to reach that right now the forecast for twenty two which would be the number would be your would be basing this off of its predicted it to the two thousand six hundred forty eight million which is about thirty three million shy of the forecast so it would need to exceed that forecast that is right now before that first cut could happen in two thousand and three she is me two thousand twenty three. Of the second cut would be at two thousand seven hundred fifty four million dollars and the third and final cut would be it two thousand eight hundred thirty million these triggers would be met and it would it would they would have to be met before what happened so it could take more than three years of bill for which is the happen and there has to be a year at least between each one of these triggers the revenue just can hit a certain amount we had a big boom or something like that you say well it that the twenty eight thirty two thousand eight hundred thirty million you can't jump a year ahead or anything like that but it could be delayed a year or could be delayed two years of the con returns down the cuts. Of in these cuts or these transfers to general revenue to the Medicare trust fund or or and and the triggers coincide with tax cuts to ensure that there's replacement in that fund choice not short and the. Mr Chairman I would be happy to answer any questions at this time people may have okay which letters you anything you want to add and please recognize shall or ten others within their toss and no Sir I think sponsored an excellent job of explaining the changes that were made since we were last time thank you Sir members any questions the bill sponsor. Okay thanks anybody also speak against a bill for the bill. President your clothes rebuilder I am close to the bill thank you the motion from representative Fortner submitted passers are correct. As amended to a motion as amended region Fortner for do pass any debate members. All in favor say aye opposed. I censored resolutions passed your bill. All right members the circle back around. I'm sorry. Okay members who represent buddies up and what we're gonna do is we're running bills right holders bills but I think I think we have some amendments here with these bills not sure which one which one you want to first start thank you difference. Eighteen thirty. Okay let's start with eighteen thirty three north of these other amendments. Would be eighteen thirty three and world for holders bills. the Bill. Good government worker orders way around the table now. It looks like it's just ministers going to be to help bills at the sponsors Russian buddies B. R. at your your members your bill right. Okay. We have adoption motion for adoption amendments. Well motion any debate all in favor say aye. Reserve bank Abedi your motion argument has been adopted Sir. What is your your record please recognize yourself and grow representative Howard Beatty from district nine Mr chairman ladies and gentleman of the committee would like to present house bill eighteen thirty three it is an act to modify tax treatment of classroom teachers wages allow certain wages of classroom teachers be deducted from net income and for other purposes basically what where this bill came from was I had a meeting with the the superintendents of the co op in Southeast Arkansas and during that meeting we discussed the the problems with recruitment and retention of educators in Southeast Arkansas I know it's not just a problem that inheritor evident in Southeast Arkansas but in a lot of districts so begin thinking away what what would be a way to recruit educators and then also way to retain the educators and I guess and throughout my life and I'm thankful for public education and what it's meant to me and what is allowed me to do and you know they always said that you know to be a school teacher I think more so now than ever that is a calling I know that I'm I'm not equipped or built to work in that environment some very respectful what for what the classroom teachers have to go through in order to do the job that they love so with that in mind came up with the idea that exempt a classroom teacher that spans thirty or more hours a week in the classroom educating students. and then with consideration given to the tax ID and the revenue of the of the state instead of hitting that all it wants to spread that over a four year period twelve five a year so over a four year period to get to the first fifty thousand dollars of wages for classroom teacher I know there are a lot of other M. proposals out there to go to zero percent income tax in in different areas this is just a starting point something in an area of the state where we we need attention and we need help I think the I haven't heard any opposition other than folks that would like it to apply to their trade in and their profession also there is one punitive damage in as far as retention that if these educator switch school districts then for the first two years after they switch they would lose that the exemption on income. And with that I will entertain any questions. You have any questions. December. Just wanna get you kind of already touched on it and with all due respect to teachers they are extremely important maybe more important than some people would say than other trades but the problem I have with it is is we're not treating equal we do this for teachers why are we doing it for other traits. And I guess that's more statement than a question created. No general questions. Paul outside of the fiscal impact numbers you anything that you good. President buddy will close for you bills or. Yes Sir I'll just close and say again that I think most folks would agree the importance of this area the importance of classroom teacher attracting quality educators in our school districts throughout the state I think this is a considerate bill both to the need to of the schools and school districts as well as to the revenue needs of the state and a great starting point and I know this may be a bill that we can't can't take care of this time uh but as long as I'm here we'll look at it again next next session to if if I'm lucky enough to be sitting in the city so with that I'm I'm closed thank you Sir appreciate it. All right you wanna roll with eighteen seventeen. Are you of that one I'm I'm good with that one can members be eighteen seventeen there's no amendment on this. There's one somewhere it's it's program but it was just for sponsors okay transponder to the bill okay again representative Beatty District nine actually and parts of actually Drew County house bill eighteen seventeen is a bill to adopt the federal law can concerning the income tax deduction for depreciation and expensing of property and it's a one page bill and it basically takes the state depreciation rules and makes a match the federal depreciation rules the the one page as you look through the impact statement it does a lot of things this is a a hefty left but this is a bill representative representatives that will apply to all businesses in the state this will be an immediate eighty two every business This bill alone will probably save Arkansas business for million dollars Justin CPA fees right now they have to maintain dual depreciation schedules one for the state and then one for federal tax purposes this is a good bill and one that I I had hoped. Bills like this this this is the reason I'm here is for a bill like this I think it has brought impact I think it will help the state in attracting new businesses that that will look at this as a favor of option several of the states that our neighboring states they already have I guess it's called rolling conformity where they you know when there's a change in the federal law that our law changes So this bill will help help in that area it does come with a hefty price tag as you can see but it's a price tag that I guess the net effect after four years of they're gonna take a depreciation anyway so item I'd also appreciate you looking at this and giving consideration this bill no I would agree with you sure this is a good bill it's a low wash out in two sessions go we had the task task force we looked this thing pretty hard is just the price tag versus everything else was trying to a time I'll say comparing these the ticket price this time to the last time the prices look a whole lot better it into a lot better I was surprised on this fiscal impact so many questions. Thank you wanted this you're good. K. anybody I speak against a bill for the bill representative close for your bill I'll close for the bill all right thank you Sir and last but not least eighteen eighteen. Again representative Howard Beatty and present house bill eighteen eighteen Mr members of the committee eighteen eighteen is a bill to create a sales and use tax exemption for parts purchased to repair agricultural equipment and machinery and timber equipment and machinery The it I guess the primary focus a reason for this bill it is the fact of our I guess the outlying counties and and Lucy no business to contiguous states for folks could move equipment are purchased equipment and repairs and a favorable tax rate than they are locally so our local repairman and service interludes in out on that business so that was the primary focus of bringing this back in give them a reason to stay local and those dollars to stay in the state and and then have the economic multiplier utilized in local communities where those dollars making the most it does again come with a little price tag but it's a price tag it'll help to the the top industries in the state and provide also some insight on what else those industries provide in financial support revenue to the state so again it's good information to have but this is a bill that I would again like I I came for these type of bills. And so you just add on your election like this bill I filed this bill several times The my part of the world so you got Clay County right right up against the. Of Butler County Missouri so you got Lieutenant Piggott there to sales tax is ten percent so so you have a part of our go out of the combine or a transmission out of it for a drive tractor forty thousand dollars forty thousand dollars for not to have the warranty right. So ten miles down the road from Piggott Arkansas is Kennett Missouri and they also have a John Deere dealership Arkansas has ten percent time have the local sales tax a state sales tax County ten percent so you got a forty thousand dollar break down the farmer will have that tractor com or whatever it is loaded up and take it ten miles down the road and have zero so saves in the State Farm four thousand dollars down cent residual side effect that members of the the John Deere dealership there and pick it Arkansas. Loses the business and when the farmers over a can of his or his or buy more parks more stuff Drive by the local Chevrolet dealership said Truckee Lacson this residual effect is on on on on so this is actually in my humble opinion is really really good bill to us that was free for anybody thank you for dinner the forty got a question. Yes thank you Mr chairman representative Beatty it also says full and partial repair so is the the labor on the repairs of these partnerships included in this yes Sir it is okay thank. I thank the first time I run this I think is court at sixteen million I think it was like twelve million for parts for me for the repair portion of the person wouldn't you're recognized her. Thank you Mr chairman it was refresh my memory didn't we do something for some type of timber equipment earlier I think we did the several several sessions ago I think we did I think we did timbre number four do one this year not a single line. The scene like this committee back in the nineteenth or something like that did something for ten okay as well thank you this is a good bill that is really good bill and really could really help The surrounding counties as some borders of all these other states represent these. I think my question is answered I just was curious I agree with you it's a good bill what would you define Parts purchased to repair qualifying equipment what is a qualifying equipment. I think the intent of the qualifying equipment Z. thing this utilized I think it spells it out in the bill that it equipment exclusively used are implements in the commercial production harvesting processing of timber or agriculture in the state our thank you thank you go down to the end table until Assad the if I would work through that issue. So you have a so you have a John Deere dealership international dealership whatever even up even a local. Got done secretary mechanic work I would be if they were to that issue. Thank you Mr chair Paul Goehring Arkansas DFA I'm sorry representative could you repeat your questions make sure I understood standard. At. Are you asking me yes I thank you yes this was you talking to me I was I'm sorry I was reading through some language of the bill when the question was asked my apologies it went back to the repair services I think that's the part that I was reading and I was unsure of the the Bill it contemplated the for the services to repair versus just the purchase of the part to repair so that's why I was looking through my comments on the bill so but if if you will not just was in and I think route represent but you may have answered it just what would be a qualifying equipment because I I I I would imagine there's a ton of. Agricultural and machinery for timber that could be included in this shortly after to speak to that so we we currently have the exemption for agricultural machinery equipment that's use directly in the commercial production of food or fiber is a business yes have timber harvesting equipment that we have an exemption for so but I think the key thing to be aware of is that it has to be that piece of machinery that employment has to be used exclusively and directly in the commercial production of food or fiber of a business so um those individuals that are not there are commercially engaged in farming is a business that's usually where they they might make a purchase whether or not it's a tractor it but if they're not filing a schedule F. with a proper loss from farming generally that's would be one of the benchmarks for us to determine that that that purchase was not for commercial farming as a business. But but also I guess part of the question take a question is that further does the say the the folks at local dealership they. This was special paperwork for those guys to break it out he's charging what say somebody comes in and buys a lot more just for the House but your bond at the local dealership so obviously that's not everyone qualifies service up to be up to the dealer to figure out who's going to do what that there is certain we have a in our sales and use tax rules we have promulgated a form that the farmer and has to sign to prove entitlement to the exemption and then the dealership will retain copies of that form for purposes of if they ever get audited just to make sure that they sold an item of machinery exempt from sales or use tax because the individual claim to be a commercial farmer that they can go all right staff can go back and just verify through contacting that former to see well we didn't see a schedule F. well with your term could you just let us give us some additional information so we can verify your entitlement to the exemption so for our purposes there if this bill were to be enacted this bill doesn't specifically have any type of requirement that the farmer make any type of statement or the timber company making type a statement to the retailer that they are engaged in those exempt type of business is. Certainly for for audit purposes it's going to be recommended that the retailer keep some type of documentation on exempt sales to either the the farmers or the or the timber harvesters. Thank you original questions person would. When the sessions over Mr Gehring. I thought you will be. I this is been an absolute pleasure. It will let you that on the day of. I will be sure I understand when you go and then you buy a new tractor you have to sign off that it's being used and what you just said is that that will still be present relative to this new bill. That would probably be recommended I would say if this were to be enacted that they would need to be some type of a documentation that that retailer would hold on to to make sure that because I was represent as Mister chairman mention you know some of these repair parts or can be quite expensive and we want to make sure that the claims of an exemption or that there's some type of audit trail for the retailer to make sure that they sold it exempt from sales tax that that liability doesn't come back to the retailer because there was an inadequate claim of exemption your honor to knows now we we certainly from time to time we'll we'll we'll check with the retailer to perform an audit to make sure claims an exemption forms or or properly capped and if there is a sale that they can't find the form then they will give them an opportunity to go back and make sure they get the proper documentation from the person that bought the tractor just to make sure that they have it because we want to give a safe harbor to those businesses that maybe that maybe a form was taken but it didn't get into that particular transaction file and we will give them an option to go back and get whatever documentation that they need to make sure that the the sale was exempted no one's going to get assessed for that particular purchase on it follow up from the. Hello what what parameters did you used to come up with these numbers of the of the impact I mean. There were there was a statistical information from the USDA the U. S. bureau of economic analysis and the census bureau for agricultural and timber expenditures so it was statistical information this this type of purchases right now when the farmer goes to the the dealership to buy parts for their agricultural equipment it's not separately stated on that the retailers report on what was sold so we're we are relying upon statistical information for this fiscal impact from you is the the USDA so so are we saying that it could be more could be less this is based on average it is an estimate yes Sir could be the last coach could be less yes Sir thank you thank you Mr chairman welcome Sir. Rear questions. Review body anything else you wanna answer. Commission chairman just thanks for thank me for here in the bills welcome service section looks in really good bill here so members I guess as anybody any questions or anything before we turn. I think resent Fortner is got us pictures coming next Tuesday is that correct on the steps. After this meeting. Okay on sept separated I. One of the German of the House. The. After the. Here's okay okay so we're gonna entered I'm being told after we get out Tuesday afternoon for meeting will take pictures out here so everybody come looking pretty. You can unless we are ripping Lane Jean to do so with that being said is managed to earn.