The Senate Revenue and Taxation Committee on Wednesday advanced legislation that would implement Gov. Asa Hutchinson's plan to cut individual income tax rates for Arkansans with taxable income below $21,000.
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With no debate, the committee recommended Senate approval of House Bill 1159 by House Republican leader Mat Pitsch of Fort Smith. Senate Republican leader Jim Hendren of Sulphur Springs said he expects the Senate to consider the bill Monday.
This morning, the House Revenue and Taxation Committee will consider Hendren's Senate Bill 115 -- which is identical to HB1159 -- and House Bill 1162 by Rep. Charlene Fite, R-Van Buren, that would exempt military retirement benefits from the state's individual income taxes, said the committee chairman, Rep. Joe Jett, R-Success.
HB1159 and SB115 would become effective for tax years starting Jan. 1, 2019. The cuts are projected to reduce general revenue by $25.25 million in fiscal 2019, which starts July 1, 2018, and $50.5 million each full year thereafter, according to the state Department of Finance and Administration.
The Senate committee chairman, Sen. Jake Files, R-Fort Smith, said the committee on Monday will consider Senate Bill 120 by Sen. Jane English, R-North Little Rock, which is identical to Fite's HB1162.
HB1162 and SB120 would become effective Jan. 1, 2018, and cut two taxes and modify three tax exemptions.
The legislation would levy a sales tax on sales of certain digital products, including "digital audio works, digital audio visual works and digital books," as well as on sales of digital codes that allow the consumer to access these products, to raise $1.2 million in fiscal 2018 and then $2.4 million in fiscal 2019, the finance department said. Music, movies and books sold at stores already are subject to the sales tax.
The elimination of this sales tax exemption replaces Hutchinson's original plan to levy the sales tax on the full cost of manufactured housing, which is now taxed at 62 percent of the home's value. Some lawmakers objected to increasing the tax on the housing.
According to the finance department, HB1162 and SB120 also would:
• Exempt military retirement benefits and survivor benefits from state income taxes, cutting general revenue by $6.7 million in fiscal 2018 and then $13.4 million in fiscal 2019.
• Reduce the special excise tax levied on soft-drink and simple syrups and transfer $3 million to the Medicaid program to offset the reduction of that tax in fiscal 2018 and then transfer $5.9 million to the Medicaid program in fiscal 2019.
• Levy the 6.5 percent sales tax rate on candy and soft drinks rather than the reduced sales tax rate of 1.5 percent on foods to raise $6.9 million in fiscal 2018 and then $13.8 million in fiscal 2019.
• Make unemployment compensation benefits subject to state income taxes to raise $1.6 million in fiscal 2018 and then $3.1 million in fiscal 2019.
A Section on 01/26/2017