“I am fortunate to come into office at a time of substantial surplus and continued revenue growth. Therefore, we can provide the tools for success to the citizens of the State and also provide meaningful tax relief.”
~ Governor Mike Beebe
The state tax on groceries is our State’s most regressive tax, taxing Arkansas families on the very basic needs for life. Arkansas must eliminate this tax responsibly, but with a phase-out. Governor Beebe’s budget includes an allocation of General Revenue in fiscal year 2008 and in fiscal year 2009 to begin the phase-out of the food tax. This will allow immediate reduction of the state sales tax on food by half, from six percent to three percent.
Governor Beebe also proposes increasing the $300 Homestead Property Tax Credit to $350. This credit has not been increased since it was originally passed and can be financed from the special fund that was established for the credit.
To help attract new manufacturers and retain the ones we have, Governor Beebe has proposed a partial exemption of sales tax on the utilities consumption of manufacturers. Reducing their tax rate from six percent to five percent is the first step in eliminating the tax on utilities for manufacturers and making Arkansas more competitive with our sister states.
Arkansas must put a special focus on the industries of the 21st century that will ensure our long-term economic success. The Governor’s budget provides tax relief to farmers who have seen significant increase in their cost of doing business as their fuel has skyrocketed and the sales tax on fuel has increased proportionally. Governor Beebe proposes replacing the sales tax on farm fuel with a gallonage tax to prevent such dramatic increases in the future. The rate of the fuel tax should be the equivalent of the sales tax farmers were paying on fuel before the recent dramatic increases.
“Some people believe that we should spend our increased revenue on one project or another, but it is not ours to spend. This money belongs to the people of Arkansas and they ought to get it back the same way they spent it. Since they have paid their money in taxes, we will return it in the form of tax relief. With a reasonable approach, we can offer meaningful tax relief to all Arkansans without negatively impacting state services.”
~ Governor Mike Beebe