A bill that would limit the state sales tax on trucking equipment and provide amnesty from the taxes owed on past purchases cleared the Arkansas House last week
and now goes to the Senate for consideration.
Trucking industry supporters called the measure a "pro-business" bill that would prompt trucking companies to license their vehicles in Arkansas instead of in bordering states that charge little or no sales tax.
The tax break would mean a loss of $3.2 million to $4.5 million to the state, depending on how many companies register in Arkansas, according to the Arkansas Democrat-Gazette. And the state figures it would lose another $ 1.86 million in taxes because of the amnesty provision.
But Rep. Don House, D-Walnut Ridge, argued that the tax break eventually would generate increased revenue for the state as more and more truckingcompanies begin to license their vehicles in Arkansas.
Opponents said the amnesty provision the Arkansas Constitution bans forgiving corporate debt without payment.
The bill would limit state sales tax to the first $1,000 of a truck's purchase price and the first $500 of the purchase price of a semitrailer. That translates into a cap of $ 51.25 for a truck and about $25.62 for a trailer under the state's current sales tax rate of 5.125%.
The bill would apply to trucks with a combined weight of 40,001 pounds to 80,000 pounds. To be covered under the measure's provisions, a semitrailer would have to be drawn by a truck tractor.
The plan would not affect city and county taxes, which can apply to as much as the first $ 2,500 of a purchase price. The amnesty provision is for firms that have registered equipment in other states.
For years, some Arkansas carriers have registered in Oklahoma, which charges a $ 10 excise tax in lieu of sales taxes on equipment.
Tractors and trailers cost tens of thousands of dollars.
Oklahoma tightened its place-of-business rules last year to stipulate that a company must have an address, phone number and at least one Oklahoma-based employee to register trucks there. Because of the changes, some of Arkansas' small carriers must establish an operation out of state or switch their registration to Arkansas and face paying sales taxes on the past three years of purchases. Larger carriers typically have facilitiesin Oklahoma or other states that border Arkansas.
The amnesty would allow carriers to avoid paying the back taxes.