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Arkansas: Budget Proposal Reduces Sales Tax on Food


Arkansas Governor Mike Beebe's (D) proposal for a balanced budget was presented to the Arkansas Legislative Council and Joint Budget Committee on November 15, 2012. One of the more noteworthy aspects of the proposal is the governor's call to all but "eliminate state sales tax on food… ."

The governor's proposed $4.9 billion budget "is calling for reducing the state's grocery tax from 1.5 percent to 0.125 percent." The small sales tax on food that remains in place is due to Arkansas Constitutional Amendment 75, which "designates 1/8 of 1 percent of the state's general sales tax for Arkansas Game and Fish Commission, … Arkansas State Parks, … and Keep Arkansas Beautiful Commission… ."

It is estimated that the cut in sales tax will "cost the state $69 million… ." Yet the reduction of the grocery tax is not a sure thing: in order for it to take effect, "deductions in several key areas [must] decline by at least $35 million for six consecutive months. The deductions include the state's desegregation obligations and payments for certain bonds."

Governor Beebe made an election promise to "phase out the state's sales tax on groceries" during his gubernatorial run in 2006, and he has reduced them from 6% since he took office. He wants the current reductions to be done responsibly: "… I said we're going to attack the grocery tax and we're going to reduce it in a responsible manner as we can afford to do it without adversely impacting state services." (CBS News).

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.