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Food tax cut sails through committee Tuesday, Jan 30, 2007 By Doug Thompson Arkansas News Bureau LITTLE ROCK - Gov. Mike Beebe's proposal to cut the state's 6 percent sales tax on groceries to 3 percent sailed through the Senate Revenue and Tax Committee on Monday and was scheduled for a full Senate vote today. The measure's fast track could slow in the House, where opposition is forming. Reducing the sales tax on groceries is "one of my top priorities," Beebe told the Senate committee Monday, speaking in person for Senate Bill 185 by Sen. Bobby Glover, D-Carlisle. "That's what I said in the (gubernatorial) campaign. That's where I still am, and that's where I want to go," said Beebe, a Democrat who defeated Republican Asa Hutchinson in last year's governor's race. "I believe the food tax is the one the voters have spoken on." The cut would cost an estimated $120 million in the first year and would go into effect July 1. Though Senate President Pro Tem Jack Critcher, D-Bateville, is not on board, Glover has 29 Senate co-sponsors. Critcher and House Speaker Benny Petrus, D-Stuttgart, favor an income tax credit over Beebe's grocery tax reduction. After the governor's proposal received the Senate tax panel's endorsement without dissent Monday, Petrus reiterated he preferred an alternative. "Neither one of us is going home without something," Petrus said. The speaker supports an income tax credit in House Bill 1337, filed Monday by Rep. Keven Anderson, R-Rogers. He said he and Anderson also are working on other elements of a tax package that would provide tax relief for retirees and a cut on sales taxes paid by industry on their utility bills. The combination would give relief to Arkansans who need it most and also have a direct economic development benefit, Petrus said. HB 1337 will cost between $80 million and $90 million a year, Anderson said. It would a tax credit of $75 per family member for single parents who make $20,000 or less and married couples making $40,000 or less. The income level could be adjusted as financial impact is studied, but the $75 per family member won't change, Anderson said. The utility tax cut for manufacturers would cost about $30 million a year in Petrus' proposal, compared to Beebe's proposal to cut that tax by one-sixth, which would cost $10 million. Anderson's bill showed 62 of 100 House members as co-sponsors, more than enough to win House approval. However, the bill showed no Senate sponsors. Glover's bill to halve the food tax added four House sponsors Monday, bringing the total to 46. The bill would need 51 votes to pass the House, if it could get through the House Revenue and Taxation Committee. "Maybe the best solution is a compromise between the two bills," Petrus said. "Whatever it takes." The head of Arkansas Advocates for Children and Families, which supports an earned income tax credit, testified for Beebe's bill Monday. The group proposed a credit that holds the prospect that a recipient could get more money in the refund than was withheld for his taxes. That type of "refundable" earned income credit "simply isn't happening," AACF Director Rich Huddleston said later in an interview. HB 1337 would cap the benefit at the amount the taxpayer's tax liability. With the cap, either of the two bills would benefit the poor, Huddleston said. One misconception that needed clearing up about the grocery tax bill is that many people on federal Food Stamps would not benefit, Huddleston told the committee. "Food Stamps benefit the people who get them to about $1 per person, per meal," Huddleston said. "The rest comes out of their pocket." Even poor families on food stamps would benefit from the grocery tax reduction, he said. Beebe told the Senate tax committee that one-eighth of 1 percent of the state sales tax on food was mandated by a constitutional amendment that was passed by voters. The one-eighth cent conservation tax cannot be ended without another constitutional amendment, he said. "So you're voting to remove more than half the sales tax today, leaving two and seven-eighths," he said. |
