AR Lawmakers Looking at Proposal to Tax Churches

1 CommentTaxes,

This morning the Arkansas Tax Reform and Relief Task Force met at the Capitol in Little Rock.

Among the items on the task force’s agenda is a proposal to tax investments, passive income, and sales by churches.

Under current law, Arkansas does not impose a state tax on interest churches earn investing money in savings accounts or on the sale or rental of church property.

This tax break has been on the books for more than 30 years, but now some lawmakers want to discuss doing away with it.

Charities and churches contribute at least $378 billion to the U.S. economy each year — and possibly much more than that, according to some estimates.

Many churches operate on budgets that are so tight they likely would have to shut their doors if they were taxed at the same rate as for-profit corporations. Our state needs to think twice before increasing the tax burden churches and charities carry.

This isn’t the first tax increase the task force has looked at this year. A few weeks ago the task force voted to move forward with discussions about increasing the state sales tax on groceries and ending Arkansas’ annual back-to-school tax holiday.

Family Council supported efforts to eliminate the grocery tax and worked very hard to help pass legislation creating the tax holiday in 2011.

If you are concerned about the Tax Reform Task Force’s proposal to raise taxes on churches, I encourage you to contact your state representative and state senator. If you need help contacting them, call our office at (501) 375-7000.

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Gov. Hutchinson Opposes Grocery Tax Hike

Current Events

Today Gov. Asa Hutchinson sent a letter to the legislature’s Tax Reform and Relief Task Force expressing his opposition to increases in the grocery tax.

Under current law, the sales tax on groceries is slated to fall from 1.5% to 0.125% on January 1, 2019.

Last week the Tax Reform and Relief Task Force voted to review and discuss a plan to raise the sales tax on groceries to as high as 6%.

The task force cannot raise the grocery tax itself, but it can develop a plan to raise the tax and make recommendations to the legislature in 2019.

From 2009 – 2013 Family Council supported Governor Beebe’s effort to reduce and ultimately eliminate Arkansas’ sales tax on groceries. People shouldn’t be penalized financially for buying basic necessities like bread and milk.

Hats off to Gov. Hutchinson for opposing the grocery tax!

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Task Force Plans to Review Grocery Tax Increase

Legislature,

Yesterday we wrote that the legislature’s Tax Reform and Relief Task Force met to discuss proposals to raise the state sales tax on groceries; eliminate the annual sales tax holiday for back-to-school supplies; levy a sales tax on nonprofit hospitals and nursing homes; and cut taxes on new and used cars.

Bad News From the Task Force Meeting

The Arkansas Democrat-Gazette reports the task force voted to further review plans to increase the state grocery tax.

Under the proposal, the legislature would increase the state sales tax on groceries from 1.5% to 6.5% and create an earned income tax credit that would help offset the effect the grocery tax would have low- and moderate-income families.

The task force cannot raise the grocery tax itself, but it can develop a plan to raise the tax and make recommendations to the legislature in 2019.

The task force also agreed to further study a proposal that would eliminate the back-to-school sales tax holiday. That’s bad news.

Good News From the Task Force Meeting

Lawmakers opted to continue reviewing plans to exempt vehicles sold for less than $10,000 from the state sale tax, and decided not to move forward with a proposal to tax sales to nonprofit and charitable hospitals and nursing homes. That’s good news.

The Bottom Line

I’m glad legislators might cut taxes on new and used cars, but it’s troubling that some elected officials want to raise taxes on basic necessities like groceries.

Lawmakers have indicated their goal is to reduce income taxes for top earners as well as low-income families. To do this, some say they need to overhaul — and increase — Arkansas’ sales taxes.

If Arkansas raises taxes on groceries while giving income tax breaks to the poor and the wealthy, that’s going to hurt middle class families who don’t qualify for any tax credits. No one should be penalized for buying bread and milk.

Likewise, eliminating the back-to-school sales tax holiday affects parents with young children. The tax holiday doesn’t exist to help businesses. It’s meant to help families. The tax holiday makes it easier to purchase basic supplies for educating students.

Legislators need to think very carefully before taking up proposals to eliminate the tax breaks or raise taxes on everyday families.

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