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Senate unanimously approves grocery tax reduction; House test awaits Wednesday, Jan 31, 2007 By Doug Thompson and Rob Moritz Arkansas News Bureau LITTLE ROCK - The Senate unanimously approved Gov. Mike Beebe's proposed grocery tax reduction Tuesday, setting up an early showdown in the House, where leaders back an alternate tax cut plan. By a 35-0 vote, the Senate endorsed Senate Bill 185 by Sen. Bobby Glover, D-Carlisle, which would fulfill Beebe's No. 1 gubernatorial campaign promise by cutting the state sales tax on groceries by half, from 6 percent to 3 percent. The new governor hailed the vote in the Senate, where he served for 20 years before being elected attorney general four years ago, as validation of the support he has said received statewide for the proposal during his successful run for governor last year. "The unanimous senate vote to reduce the state grocery tax showed the statewide support for meaningful, responsible tax relief for all Arkansans," Beebe said. "While I remain confident, we will continue working with the support of the Arkansas people toward making this historic tax relief a reality as this legislation goes before the House Revenue and Tax Committee." Meanwhile Tuesday, supporters of a competing tax reduction package were mobilizing for a showdown in the House. Two bills have been filed this week and are expected to be on the House tax panel's agenda Thursday, along with Glover's SB 185. Both plans would reduce taxes by about $120 million annually. House Bill 1336 by Rep. Johnny Key, R-Mountain Home, would raise the minimum taxable income for retirees from the current $6,000 to $10,000 at a cost of about $21 million annually. An identical bill, SB 179 by Sen. Shawn Womack, R-Mountain Home, was filed in the Senate. HB 1337 by Rep. Keven Anderson, R-Rogers, proposes an annual income tax credit of $75 per dependent for single taxpayers who earn $20,000 a year or less. Married couples that make $40,000 or less annually would be eligible for the tax credit. "This is targeted grocery tax relief for those who need it most," Anderson said, adding that the proposal would provide as much as $90 million in income tax relief for low-income Arkansans. Two other tax cut bills are being developed, Anderson said. One would cut the sales tax on manufacturers' utility bills by 3 percent, at a cost of about $30 million. Beebe has proposed a 1 percent cut. The other would amend Act 647 of 2005 to require any sales tax revenues the state generates when Congress allows the taxation of Internet sales to go to the state Department of Highway and Transportation. During the 2005 legislative session, the Legislature approved a bill, later signed into law as Act 647, which would eliminate the state's 6 percent sales tax on groceries if Congress allows Internet sales tax collections. The state Highway Commission has been lobbying the Legislature for additional money for interstate and highway improvements. During the Senate debate on Beebe's grocery tax reduction, Sen. Shawn Womack, R-Mountain Home, said he was concerned about the timing of the vote. "We still have a court special masters report due on schools, we don't know how much educational facilities are going to cost and we have other issues with [public] education. Shouldn't we be discussing this bill at the first of March rather than the end of January?" said Womack, co-chairman of the Joint Budget Committee. "You know as well as I do that this bill won't come up any time soon in the House," Glover said. The grocery tax reduction proposal is part of an overall budget plan that addresses court-ordered improvements in public schools, spends more on higher education and still provides tax relief, Glover said. Sen. Kim Hendren, R-Gravette, reminded Glover that voters rejected ballot initiative in 2002 that would have eliminated the tax on groceries altogether. If voters had wanted to lower taxes on food, they would have done it themselves, he said. But Glover said the state did not have budget surplus anticipated to be $843 million in 2002, and that the measure on the ballot then would have wiped out food taxes. At the time, opponents said the measure would have lopped more than $250 million a year from state revenues. Sen. Jack Critcher, the Senate president pro tem who has said he favors income tax relief over Beebe's grocery tax relief proposal, said Tuesday he had intended to vote against Glover's bill but had to consider the possibility that the House package would not reach the Senate. "This may be the only vote I get for tax relief, so I voted for the bill," Critcher said in an interview. "When a bill passes one chamber 35-0, you have to like its chances on the other end." |
