For Immediate Release
February 14, 2003
ARKANSAS GOVERNOR PROPOSES ANOTHER INCREASE IN SALES AND USE TAX
In his 2003 State of the State address, Governor Mike Huckabee
proposed another increase to the Arkansas sales and use tax rate, the
second in as many years. In January 2001, the tax rate increased 0.5%
to 5.125%. Now the Governor is calling for an increase to 5.75%.
The State must raise $474 million in revenue to avoid massive budget cuts.
The sales tax rate increase would be an easy to achieve revenue source,
requiring only a simple majority vote to pass, as opposed to property
or income tax increases, which require a super-majority vote. The state
is trying to avoid the elimination of tax exemptions currently in place.
To soften the blow, the Governor is also proposing an economic development
plan that would, among other things, call for: (1) a job creation tax
credit based on payroll rather than average wage; (2) a sales and use
tax refund opportunity for new, targeted businesses to be added to the
existing investment incentives available to Arkansas companies; (3) a
payroll rebate program; (4) an income tax credit for research and development
expenditures; and (5) transferable income tax credits.
Targeted businesses would include certain manufacturing operations, agriculture,
information technology, transportation and logistics, and bioengineering
and biotechnology.
If you would like additional information on this topic or have any questions,
please contact J. Lynne Fontana, Regional Vice President - Sales & Use
Tax Group at (281)578-3700. E-mail lfontana@thesaltgroup.com
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