Dear Mahatma: Repeal sales tax exemptions on billboard and radio advertising. Earmark the revenues for our highways, public transit, pedestrian and bicycle trail improvements. Arkansas has one of the highest sales tax rates in the country, and our tax code is shot full of holes by special-interest exemptions. -- Doug
Dear Doug: You refer to a recent column in which we "analyzed" Issue 1. That measure, if approved by voters on Nov. 3, would make permanent a 10-year temporary half-cent sales tax for highways. That sales tax was approved by voters way back in 2012.
Almost $300 million would be raised a year for state, county and city road improvements. In fiscal 2020, $289.9 million was raised.
Not everyone thinks Issue 1 is a good idea. Sales taxes in particular are said to be regressive and hit the poor harder than the prosperous.
Back to the question at hand. Sales tax exemptions on advertising? We asked the Department of Finance and Administration about this.
Turns out there is not a blanket tax exemption for the sale of advertising, although newspaper and billboard advertising are exempt. Sale of broadcast time is also exempt from sales tax.
It's interesting to note that political advertising is also exempt from sales taxation. That sound? It's the cartwheeling and cheering of local television executives. It's bonus time, baby! The French Hill-Joyce Elliott race alone -- the mind reels.
There is also plenty of advertising in favor of Issue 1. Oh, the irony: No sales tax on advertising that advocates a forever half-cent sales tax.
See above, reeling mind.
We're skeptical, though, that repealing the sales tax on advertising would come anywhere near raising the $300 million a year generated by a general sales tax. How permanent would the tax be? It would be incorporated into the state's constitution, which is pretty darned permanent.
The money raised would go to the Highway Department, 70%; 15% to county governments; and 15% to city governments.
The question boils down to this: How much are Arkansans willing to devote to roads? We'll know soon.
Dear Mahatma: ArDot would have more money if they quit building what I call state-maintained corporate driveways. There are a number of state highways that are less than a mile long and only access roads to local factories. -- David
Dear David: That's an interesting observation. Or accusation. Let's get a response from the Arkansas Department of Transportation.
The agency says it did build and maintain a number of very short highways under the Industrial Access Road Program. This occurred back in the 1980s. The agency points out that state government often provides incentives for corporations to come to, or stay in, small, wonderful Arkansas.
Individual project costs under the program were divided between state and local funds -- 20% state funds and 80% local funds. Most roads were short. For example, 0.02 miles.
ArDot says it hasn't had a similar program in decades.
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