Leader Blues

Friday, January 12, 2007

TOP STORY >>Plans to drop grocery tax an easy sale for shoppers

IN SHORT: Customers at local grocery stores say they’re glad Gov. Beebe has proposed to phase out at least part of the state’s 6 percent sales tax on groceries.

Leader staff writer

ercent in taxes every time they purchase groceries, but if Gov. Mike Beebe’s proposal to phase out the state’s 6 percent sales tax on food is passed, shoppers could be paying as little as 2 or 3 percent, a decrease that many local residents are happy to hear.

“I think it’s a pretty good idea,” Tressie Shirley said, while shopping at Kroger in Jacksonville. “You’d be surprised how much it saves.”

Shirley, a Jacksonville resident, said she has been to states without a tax on food purchases and they do well without it. Arkansas is one of 20 states that tax groceries, including Louisiana, Mississippi and Oklahoma, according to the Federation of Tax Administrators.

Weekly shopper Juliet Smith of Jacksonville said it is a good thing that Beebe is trying to do. “I buy groceries every week, so it would really help me out,” Smith said.

“I like it myself; my bill will be cheaper,” Lisa Johns of Jacksonville said. “I don’t see anything bad about it, we’ve got enough taxes already,” Johns added.

Beebe has called the 6 percent sales tax the most regressive tax in the state, and said eliminating it will not only help the economy but also is “the morally right thing to do.”

Other shoppers also said getting rid of any tax would be a good thing, but some shoppers were leery of another tax taking its place.

Marty and Judy Jones of Jacksonville said they are worried that if Beebe does do away with the 6 percent sales tax the state might put replace it with another tax.

“It’s the politician’s way not to give up a tax they already have,” Marty Jones said.
The new governor stressed his proposal in his debut speech to the Legislature on Wednesday, calling for an immediate reduction by half.

Beebe promised during his gubernatorial campaign to phase out the food tax, which generates about $224 million annually in state revenue, helping fund education and a variety of other programs.

Of the 6 percent, 4.5 percent goes directly into general revenue, 0.875 percent is dedicated to education improvements, 0.125 percent is a conservation tax adopted by voters in 1996 and 0.5 percent was imposed in 2000 to make up revenue lost to a homestead exemption to the state property tax.

Beebe voted for legislation to eliminate the tax while he was a state senator; the bill passed the Senate but died in the House.
Three bills on how to rid Arkansans of the sales tax are already pre-filed, including one by Rep. Horace Hardwick, R-Bentonville, which would phase out most of the sales tax on groceries over time.

The proposal would remove 4.5 percent of the 6 percent tax by July 1, 2010. The proposal would keep 1.5 percent to fund education, conservation and revenue lost to the homestead exemption.

Sen. Bobby Glover, D-Carlisle, has pre-filed two proposals. One would phase out 4.5 percent of the 6 percent sales tax by July 1, 2010, and keep the remaining 1.5 percent, which is already obligated.

Glover’s other proposal would reduce the tax to three percent by July 1, 2007, and then eliminate all of the tax except the 0.125 percent conversation tax by July 1, 2009.

Shoppers pay different amounts in sales tax city to city because of state, county and city taxes.

In Jacksonville, Cabot and Lonoke, shoppers pay a total of nine percent; six percent for the state, one percent for the county, and two percent for the city.

In Sherwood, shoppers pay a total of 8 percent; 6 percent for the state, 1 percent for the county and 1 percent for the city.
In Beebe, shoppers pay a total of 8.5 percent; 6 percent for the state, 1.5 percent for White County, and one percent for the city.