LITTLE ROCK — A House panel Tuesday recommended a bill that would grant a $25 million tax cut to manufacturers.

House Bill 1218 by Rep. Lane Jean, R-Magnolia, passed the House Revenue and Taxation Committee on a voice vote and goes to the full House.

The bill would reduce the sales tax manufacturers pay for electricity and natural gas. The tax would drop from the current 4.375 percent to 1 percent.

Testifying against the bill, Tim Leathers, deputy director of the state Department of Finance and Administration, said the change would reduce state revenue by about $13.1 million next fiscal year and $25 million per year thereafter.

Legislative leaders and Gov. Mike Beebe are negotiating tax reductions that lawmakers say would amount to about $100 million, which Beebe has said would be funded largely by savings from using a private option for health care expansion.

Health and Human Services Secretary Kathleen Sebelius has responded favorably to an Arkansas proposal to use federal dollars to pay for providing health coverage for up to 250,000 of Arkansas’ working poor through private insurers rather than adding them to the Medicaid rolls.