Cutting 3% grocery tax top priority, Beebe says
Posted on Saturday, December 8, 2007
There is merit to increasing the $ 2, 500 sales tax exemption on used cars, Gov. Mike Beebe said Friday, but his top tax cut priority is further reducing the state sales tax on groceries.
This year, the Legislature and Beebe enacted several tax cuts, including cutting from 6 percent to 3 percent the state sales tax on groceries. All of the tax cuts together were projected to reduce state revenue by about $ 200 million a year.
A caller during the governor’s monthly radio call-in show urged the governor to support legislation in the 2009 session to increase the $ 2, 500 threshold for the sales tax exemption on used cars to help the poor and hourly workers.
Beebe said some adjustment or inflationary increase always has an appeal.
“My first priority is to continue to attack the grocery tax. I think that helps poor people and folks on f ixed income with regards to essentials as much as just about anything that we can do,” he said.
But, Beebe said, he doesn’t want to reduce the grocery tax in a way that adversely affects the state’s essential services, most of which are educational programs. “If somebody can come forward with changing that [$ 2, 500 ] to a figure that we could live with with regards to balancing the budget and still keep the top priority of reducing the sales tax on groceries, I would be receptive to listening to it,” he said. Beebe said the $ 2, 500 threshold was set years ago. “Inflation has eaten into that, and there is a fairness argument about trying to keep that number going up, so it does take into consideration inflation, and I do know that it does hurt people on the sales tax on used cars,” he said.
Lawmakers enacted a $ 2, 000 threshold in 1991 and then increased it to $ 2, 500, effective in 1998, said Tom Atchley, the state’s excise tax administrator.
Rep. Pam Adcock, D-Little Rock, introduced a bill this year to make the sales tax exemption on used cars $ 5, 000.
That would have reduced state revenue about $ 10. 2 million a year, according to the state Department of Finance and Administration.
Another caller urged Beebe to propose using the proceeds of any severance tax increase that may be enacted in the next couple of years to reduce other taxes such as the sales tax on groceries.
The governor noted that he and the Legislature this year enacted the largest Arkansas tax cut in the state’s history, and he wants to further reduce the tax on groceries.
He said, as he has before, that if the state increases its severance tax, the new revenue should be spent on improving highways and roads. Better highways are “a huge economic development tool” that could enable the state to reduce taxes in other areas, he said.
The governor said he hopes to be able to propose a fair tax and a consensus on it before any initiated act to raise the tax is voted on in November 2008. Some have proposed an initiated act to be considered in that election.
A Cabot woman asked whether Beebe would be willing to temporarily suspend any state funding for pre-kindergarten programs to help combat illegal immigration. She said Arkansas is “becoming a sanctuary state.”
The state has $ 107 million in state funds budgeted for pre-kindergarten programs this fiscal year, according to the Bureau of Legislative Research.
Beebe said he wouldn’t do away with or suspend pre-kindergarten programs to shift state funds to “attacking illegal immigration.”
“We will do our part to help the federal government,” he said.
He’s not going to raise state taxes to increase the state funds to do the federal government’s job to enforce immigration laws, he said.
“If our cities, counties and our state are bulging right now with regard to jails and prisons trying to keep the violent criminals locked up, where in the world would you put thousands of illegal aliens ?” the governor said.
Another caller accused Beebe of “passing the buck” by saying illegal immigration is a federal problem. The caller said Arkansas should enact immigration laws similar to Oklahoma’s.
Oklahoma’s law calls for more local enforcement of immigration laws, further restricts state issuance of identification and benefits, and aims to crack down on harboring and hiring illegal aliens, among other restrictions.
Beebe said the state has enacted some immigration laws and will follow them.
“Why don’t you do something and why don’t you have your voice heard with regard to the federal government ?” he told the caller.
This year, Arkansas lawmakers enacted a law requiring state contractors and subcontractors to certify in writing that they don’t employ or contract with illegal aliens.
The law requires the state to terminate contracts if the contractor “doesn’t remedy the violation” within 60 days.
If contractors learn that subcontractors are in violation of the law, the contractors may terminate the subcontractor.
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