Leader Blues

Wednesday, January 03, 2007

TOP STORY >>Deal in works to phase out sales tax on groceries

Leader staff writer

Before he even takes office, Gov.-elect Mike Beebe already has struck a deal with Arkansas Farm Bureau that would grease the skids for repeal of the state sales tax on groceries, according to state Sen. Bobby Glover, D-Carlisle. Glover, who has pre-filed three different bills aimed at taking the sales tax off groceries, called them “trial balloons” Tuesday, but said he and other legislators await the new governor’s pleasure on the issue.

Beebe will be sworn in as the state’s 45th governor on Tuesday, then address a joint session of the General Assembly before making his inaugural address to the public at noon on the state Capitol steps. Glover said he expects the new governor to announce his intentions then. Glover said he has told Beebe that he would appreciate consideration as primary sponsor for the bill in the Senate. Beebe has apparently promised Arkansas Farm Bureau, which has one of the most powerful lobbies in the state, that he would not touch sales tax exemptions that farmers currently get on feed, seed, chemicals, fertilizer and farm equipment to make up for the revenues lost by eliminating the grocery tax.

Although Beebe and virtually all gubernatorial candidates campaigned on removal of the state tax on groceries, Glover said Beebe had never said exactly what he’s going to recommend. “It’s just a wait-and-see proposition,” according to Glover.
“It appears he wants to knock as much of it as he can out as soon as he can,” the senator added. “Whether or not we can do it that fast I don’t know,” Glover said, “but we have a large surplus in revenues and it’s increasing. We are one of 11 states that still has full sales taxes on groceries.”

“My favorite bill takes off half (the tax) immediately and the balance half in each of the two following years,” Glover said.
The senator said he has favored a grocery tax repeal or relief for 20 years, but “this is the first time I can remember since 1973 we’ve had a governor going on record saying he was going to do everything he could to repeal it.”

Currently customers at Arkansas grocery stores pay 6 percent sales tax. That includes a 4.5 percent general sales tax, 7/8ths percent tax dedicated to educational adequacy, 1/8th percent dedicated by constitutional amendment to fund the state Game and Fish Commission and Department of Natural Heritage and ½ percent to pay for the $300 homestead exemption, Glover said. In addition, various counties and cities have their own sales tax on groceries that the General Assembly has no power to change.

But of the state’s 6 percent sales tax on groceries, all could be removed except the 1/8 percent tax. Glover warns, however, that the state would need about $225 million a year from general revenues to pay for the educational adequacy fund and the homestead exemption.