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story.lead_photo.caption Lawmakers embrace on the fl oor of the House on Monday after Speaker Jeremy Gillam, R-Judsonia, gaveled the 91st General Assembly into recess. The next meeting will be May 1, when the session is to officially adjourn. ( Jeff Mitchell)

A revived bid to pass a bill on the collection of online sales taxes failed in the House on Monday, the last full day of the Arkansas General Assembly's regular session for a while.

Photo by Jeff Mitchell
Reps. Rebecca Petty (from left), R-Rogers, and Vivian Flowers, D-Pine Bluff, laugh as Kim Hendren, R-Gravette, and John Walker, D-Little Rock, prepare to hug Monday. The two women entered a resolution into the record honoring the friendship that the two men formed during the 91st General Assembly.

The session recessed until May 1, when it will adjourn for good, legislative leaders said. The delay in adjournment gives lawmakers time to consider fixing errors in bills or override any vetoes.

Part of Monday was celebratory. While legislative leaders bemoaned a lack of solutions for increasing long-term highway funding, they and Gov. Asa Hutchinson also touted successes like cutting taxes. In the House, one display of bipartisanship included a "bromance" citation for Rep. John Walker, D-Little Rock, a civil-rights lawyer, and Rep. Kim Hendren, R-Gravette, a chicken farmer.

But representatives also revived a familiar debate on the 85th day of the 91st General Assembly over whether to enact legislation aimed at getting Internet retailers to charge sales tax and remit the money to the state. The tax is already owed under current Arkansas law, but it's the responsibility of taxpayers to pay it. Few do.

Rep. Dan Douglas, R-Bentonville, told the House that Senate Bill 140 was a matter of simple fairness.

Every year, he said, he buys five pairs of Wrangler bluejeans. This year, he bought one pair at Academy Sports, a second pair at Tractor Supply Co. and the remaining three online, he said.

The online retailer did not collect any sales tax, he said.

"They're the same brand of bluejeans. They're the same style, the same size, used on the same fat body for the same purpose, and they didn't collect sales tax," he said of the online seller. "Now, is that fair? And part of our jobs is to be fair and equitable."

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But opponents of SB140 -- which was sponsored by Sen. Jake Files, R-Fort Smith -- said it was unconstitutional. A 1992 U.S. Supreme Court decision found that a state cannot require the collection and remittance of sales taxes by companies that do not have a physical presence in that state.

"This is interstate commerce. This is one of the powers that is granted solely to the Congress," said Rep. Stephen Meeks, R-Greenbrier. "This is a federal issue only. The states do not have this authority."

Files has said the bill is similar to a law in South Dakota that's under review by that state's Supreme Court. He also said the decision by online retailer Amazon to collect sales taxes and pay the money to each state that charges sales tax addresses the constitutional question.

Opponents of the bill said, if enacted, it would be felt as a new tax.

"We have to take a burden off if we're going to put a burden on," said Rep. Bob Ballinger, R-Hindsville. "That's the only way I can ever support a new tax and I get it -- there is a use tax out there -- our citizens aren't feeling it. But they will feel this."

The vote was 43-50. It required 51 votes for passage in the 100-member House. If the bill had passed, members of the Senate planned to suspend the rules to concur with a House amendment on the bill. From there, it would have gone to the governor for his signature.

Files has estimated that SB140 could increase state tax revenue by up to roughly $100 million a year, while state officials have said they don't know how much the bill would raise in additional tax revenue.

It would require out-of-state companies to collect taxes on sales to Arkansans if the seller's gross revenue from those sales exceeds $100,000 or it had at least 200 transactions for delivery into Arkansas in the previous or current calendar year.

If these companies don't collect and remit these taxes, SB140 would require them to report each year to the state Department of Finance and Administration the name and address of each Arkansas purchaser and the total amount paid, and provide notice to each Arkansas purchaser that the information has been provided to the state.

Monday's debate came weeks after Amazon voluntarily decided to start collecting sales taxes in Arkansas on March 1.

SB140 was supported by brick-and-mortar stores from Wal-Mart to Ozark Outdoor Supply in Little Rock.

"To me, it's a really black-and-white issue. There's no gray area on it. I don't understand how somebody can look at it in any way other than it's not fair," said Jim Frank, owner of Ozark Outdoor Supply, in an interview Monday. "I mean Wal-Mart's behind this thing, too. You've got little old me sitting up here on Kavanaugh beating them over the head, they've got Waltons up there swinging a big old bat, it's just beyond me."

While Amazon is the leading online seller in the United States, it accounted for less than half of all online sales in 2016, according to Slice Intelligence, which tracks email receipts of online orders. Frank said their voluntary collection won't affect him much because much of what he stocks isn't available on Amazon.

While sales taxes aren't the sole problem affecting local retailers, Frank said it's certainly a factor.

The bill was opposed by Conduit for Action, a conservative group.

"This vote saves the taxpayers from facing a heavy burden of possibly over $100 million a year in an increased collection of taxes," the group said in a statement. "It appears the House of Representatives realized this was unconstitutional and would negatively impact their constituents and voted this down."

Files said he's disappointed with the fate of his SB140.

"We still got several people that didn't even get to vote," he said. "That's part of the process, but I am very frustrated."

Hutchinson said to count him as a supporter of SB140, calling it a matter of fairness.

"This will be resolved. It is just a matter of time," he said. "I had a number of legislators that came up to me and said they want to continue to work on that, so we'll see when that can be addressed in a future legislative session."

SB140 was one of a number of Internet sales tax bills.

House Bill 2085 by Rep. Johnny Rye, R-Trumann, did not aim to collect more Internet sales taxes but would earmark online sales tax revenues above $15 million for roads. It was referred to a Senate committee, but no action was taken on it.

Meanwhile, House Bill 1388 by Douglas would require out-of-state retailers to tell Arkansas customers and the Department of Finance and Administration each year the total amount of each customer's purchases. The bill was approved by the House, but was not voted on in the Senate.

After the House adjourned, pictures were taken and hands shaken, House Speaker Jeremy Gillam, R-Judsonia, told reporters that among victories this legislative session -- such as increasing foster care funding by $26.7 million in the state's general revenue budget -- he believes there's work to be done with taxes and highway funding.

Some of that work will be done by the Arkansas Tax Reform and Relief Legislative Task Force. Files said he expects his bill to be considered by the 16-member panel.

Gillam said he's met with some members interested in serving on the task force, but has not made appointments yet.

For now, Gillam plans to go back to to his berry farm -- which he said raises peaches, strawberries, blueberries and blackberries as well as debt -- and help his brother with the family business.

Looking back on the session, Senate Democratic leader Keith Ingram of West Memphis said the "most disappointing thing was there was no action on highways.

"We are digging deeper in the hole," he said. "It seems to me the concerns that many of us had about the budget continues to look less than favorable.

"All in all, it was a contentious legislative session in many ways. But we discussed a lot of good things for the people of the state of the Arkansas. Hopefully, the things that are good will outweigh the bad," Ingram said.

Over the duration of the session, more than 2,069 bills were introduced. As of Monday evening, nearly 750 new laws and appropriation bills were approved by the 91st General Assembly.

Hutchinson, during a news conference Monday, said, "In my judgment, this is one of the most pro-growth, pro-jobs General Assemblies that have met in recent memory."

The governor said the plan is for the Legislature to finally adjourn May 1 and "the three days following we have set aside for a potential special session" to clear the way for his administration to apply for a waiver to the Trump administration for the state's Medicaid expansion called Arkansas Works.

Among measures approved in this year's regular session, Hutchinson cited laws that will cut individual income taxes for Arkansans with taxable income of less than $21,000, exempt military retirees from state income taxes and reduce the sales tax on replacement parts for manufacturing in exchange for eliminating the InvestArk economic development incentive.

"Of very great significance, we avoided a North Carolina-type bathroom bill in this legislative session," Hutchinson said, referring to legislation that dictated which restrooms were to be used by transgender people. He said he made it clear that "this is not a problem in Arkansas. It does not cry for a solution. It would be harmful for this state and I am delighted the General Assembly did not pass any legislation in that regard."

Hutchinson said the fact that legislation wasn't passed to help fund the state's highways demonstrates the importance of last year's special session in which the Legislature enacted his plan to provide about $47.5 million a year in state funds to match $200 million a year in federal highway funds. A bill that didn't make it through the Legislature would have referred to 2018 voters a highway bond issue and fuel tax increase.

"As to the long-term solutions, it emphasizes that it is difficult to get a referral of this General Assembly out to the voters, and that I hope the leadership of our state and the business community and others will look at an initiated act that might go on the ballot for a highway program," he said. "Otherwise, we'll continue to debate the long-term solution in future sessions."

A Section on 04/04/2017

Print Headline: Online sales tax quest fails again

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Archived Comments

  • mrkohl
    April 4, 2017 at 7:38 a.m.

    Just not passing or increasing any tax bill is not good government. It takes money to run a Sate properly.

  • Whippersnapper
    April 4, 2017 at 10:52 a.m.

    The state's revenue grows as the economy grows. When the government at any level passes a tax increase, they are saying that government should be a bigger part of your life. That's NOT a good thing.

  • RBear
    April 4, 2017 at 11:22 a.m.

    Whippersnapper, I don't know how simple we must be to spell it out. This is NOT a new tax. If anyone of those businesses had a nexus in Arkansas they would be required to pay the tax. You don't have a "new tax" when you establish a nexus. Are you just that thick skulled to not understand? Typical Trump demographic.

  • NoUserName
    April 4, 2017 at 11:45 a.m.

    First off, Bear, businesses don't pay s**t. The consumer pays the tax. The business collects and remits because the state forces them to. Second, the fact that people are against this is because they are tired of getting fleeced. What? The state needs money to support infrastructure? Sure. On the other hand, how about the millions we paid Jake Files to stiff Ft. Smith? Or the $2 million pay increase we just gave the legislators. Or the millions that a DHS employee just swindled instead of feeding hungry kids. It's time to SHRINK government, not give them MORE money to waste. As for the tax itself, it was pushed by Walmart for the sole purpose of forcing Amazon to collect. Now that is done, there is no reason to pass this law. As such, the p*ssy legislators can claim to the constituency they didn't pass it.

  • HarleyOwner
    April 4, 2017 at 11:59 a.m.

    Even if they had of passed the internet tax bill, I would still shop on the internet so, that still would not help the Arkansas businesses. It would just give the Arkansas Legislators more money to waste.

  • drs01
    April 4, 2017 at 1:37 p.m.

    You see what happens when government get addicted to a revenue stream. The city of Little Rock "leadership" was the only vocal group complaining about this missing sales tax. Why? Maybe because they have relied on it too much, just like the LRSD had relied on the de-seg $$$. Now they both are in trouble. Why? because they are still trying to feed the monster that is growing government. Periodically this newspaper will publish numbers showing the growth of state government employees and payroll. The line continues upward from Clinton through Beebe. Sooner or later there will be a price to pay. Little Rock and the LRSD are there now....the state will soon follow.

  • RBear
    April 4, 2017 at 1:57 p.m.

    NoNameUser et al, the same old lame argument about "wasting money." The bottom line is that none of you can really point to true waste other than situational instances. All the while, Arkansas continues to lag on education and care for the elderly. I know, you're getting fleeced ... not. The reality is you're the ones fleecing others by your anti-tax attitude.

  • Whippersnapper
    April 5, 2017 at 11:23 a.m.

    None of us can point to waste or misuse? MUAHAHAHA!!!!
    .
    Do a little research on A&P taxes in Arkansas. These are taxes imposed by cities without a vote of the people, where the money is 100% controlled by unelected special interests (by law). These funds have been blown letting A&P commissioners, staff members, friends, and family go on junkets and many cities spend 50-70% of the money that is supposed to be "promoting" cities on administrative overhead. Little Rock had a situation where the unelected A&P commissioners had contracted to their own businesses (they aren't bound by the same ethics rules as elected officials) to the tune of hundreds of thousands of dollars.
    .
    It's not just Little Rock that's wasting tax money like this, lots of towns do it. A&P taxes are usually touted as a way to improve parks, yet their funds are seldom used for that purpose. We call this "bait and switch." Go ahead and break out google and you can check some A&P tax and spending numbers for yourself. In 2002, Ft. Smith spent 52% of their A&P tax on a staff for themselves (administrative waste). In 2005, Hot Springs spent 71.5% of their revenue on staff. In 2009 Ft. Smith spent 37% on personnel, 20% to operate a visitors center, and 43% for marketing and advertising. That leaves 0% for parks. Oops. Benton's A&P commission spent $23,333 (the city of Benton kicked in another $23,333, and their public utility commission kicked in $23,333) to send the A&P commissioners on a trip to Las Vegas.
    .
    I say all of this to point out that there is TONS of waste and abuse, and elected officials view tax dollars as ways to grow their personal power. Anything that hands them more tax dollars without specific conditions tied to those dollars is a bad thing.

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