Tax measures draw a crowd

Arkansas News Bureau
David Robinson

LITTLE ROCK - Arkansas business lobbyists crowded a legislative committee room on Monday, ready to protest myriad tax increase proposals aimed at supporting education.

"This is an unenviable position to be (in)," said Sen. Tim Wooldridge, D-Paragould, the sponsor of two major tax increases, noting the packed room. "I've got everyone a little bit mad at me, and that may not be a bad thing. If everyone is just a little bit mad then maybe we're doing something that's fair and equitable."

The Revenue and Taxation Committee heard a brief explanation on, but did not debate, two bills Monday that would impose a variety of additional taxes.

Two members of the committee, however, asked about Arkansas' existing tax burden.

State revenue officials said the U.S. Census Bureau ranks Arkansas 47th in total state and local tax burden, but 36th when calculated as a percentage of per capita income.

Wooldridge, the panel's chairman, said he will wait until other education reform measures are settled before pursuing votes on tax increase proposals.

Wooldridge said the 35-member Senate will discuss tax issues today.

The Legislature is under a state Supreme Court order to pump more money into the state's education system. A legislative study concluded in the fall that an extra $847 million a year is needed to meet the court mandate.

The 2002 decision said the state's education system is inadequate and inequitable.

Lawmakers are working on funding formulas that would require roughly $400 million annually in new taxes, or about as much as a penny state sales tax would raise.

Some industry lobbyists are already balking.

"As one industry organization, I don't think the people and the business community understand fully the extent to which some legislators want to extract more in taxes," said Lane Kidd, president of the Arkansas Trucking Association. "A million-dollar-a-day tax increase is too much."

One of Wooldridge's proposals, Senate Bill 61, would raise $72.7 million annually, with taxes on natural gas, $8.9 million, corporations $25.4 million, an income tax surcharge, $36 million, beer excise tax $2.4 million.

An increase in the property tax rate as part of that measure would raise an additional $40 million to $50 million a year, Wooldridge said.

Wooldridge noted that the bill would require a 75 percent super majority vote.

"It's going to be difficult, but I feel compelled to try," he said.

His other bill, Senate Bill 62, would raise the sales tax by 5/8-of-a-cent, which would raise $241 million. It also would eliminate the capital gains tax, $20.8 million, expand sales taxes on services, $20.5 million, add a wholesale vending tax, $7.6 million, a liquor excise tax, $1.2 million, and a wine excise tax, $500,000.

Wooldridge described his motivation for the proposals as "resisting the urge to do what is easy, and that is simply a sales tax, rather than spread the burden among every citizen and every business and corporation in our state."

He said he wants his panel to be ready to expedite its approval of a tax measure when the school funding formula issue and school district consolidation issues are settled.

Negotiations on both of those issues continued Monday.

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