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Arkansas Considers Sales and Use Tax Decrease for Food


 Arkansas lawmakers consider reducing sales and use tax for food, food ingredients.

In his State of the State address, Arkansas Governor Mike Beebe (D) said he "could propose a bill to remove the [grocery tax] from our books…." Given the state's economic challenges, however, he could not do so "in good conscience."

Arkansas lawmakers may have found a way to reduce the tax while keeping their consciences clean. House Bill 1234, "An act to reduce the state sales and use tax on food and food ingredients if certain fund balances exist…" was approved by the House on April 16.

Under the proposed legislation, the director will make a monthly determination "as to whether the aggregate amount of deductions from net general revenues … during the most recently ended six-month consecutive period, as compared without he same six-month period in the prior year, has decreased by thirty-five million dollars ($35,000,000) or more…."

"If all of the necessary conditions are met, then the compensating use taxes levied … shall be levied at the rate of zero percent (0%) on the sale of food and food ingredients beginning on the first day of the calendar quarter that is at least thirty (30) days following the determination of the director."

A 0.125% conservation tax on groceries, mandated by the state constitution, would remain in place. Local taxes on groceries would also be unaffected by HB 1234.

The bill includes an emergency clause which states that the state sales and use tax on food and food ingredients may be "eliminated as soon as it is economically feasible to do so" if "the unemployment level in Arkansas … results in an increase in the number of Arkansans unable to afford basic necessities…."

HB 1234, if signed into law, will take effect on July 1, 2013.

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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.