SB133
To Increase The Sales And Use Tax Exemption For Used Motor Vehicles; And To Repeal The Special Rate Of Tax For Certain Used Motor Vehicles, Trailers, And Semitrailers.
Last Action (May 1, 2023): Sine Die adjournment
Sponsors
AI-Generated Summary
Senate Bill 133 proposes significant changes to the sales and use tax framework for motor vehicles in Arkansas. The bill seeks to expand the sales and use tax exemption for used motor vehicles by increasing the threshold for tax liability. Specifically, it repeals the special reduced tax rate previously applied to used vehicles, trailers, and semitrailers priced between $4,000 and $10,000. Under the new provisions, vehicles with a sale price of less than $10,000 would be exempt from the sales and use tax. Conversely, the bill ensures that vehicles priced at $10,000 or more are subject to the full applicable gross receipts or compensating use tax rates. The legislation also repeals the existing statutes that established the special tax rate tier for mid-range used vehicles. These changes effectively shift the tax burden by exempting more lower-cost used vehicles while maintaining full tax collection for vehicles valued at $10,000 and above.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill are individuals and entities purchasing used motor vehicles, trailers, or semitrailers priced between $4,000 and $9,999. By increasing the tax exemption threshold to $10,000, these consumers will no longer be required to pay the previous special excise tax rate, thereby reducing the total out-of-pocket cost for these purchases.
Who Might Suffer?
The primary groups negatively impacted are state and local government entities, specifically those that rely on the revenue generated from the special tax rate on mid-range used vehicles. By exempting transactions between $4,000 and $10,000 from taxation, the state will experience a reduction in general revenue and a decrease in funds distributed to specific programs, such as the Property Tax Relief Trust Fund and the Educational Adequacy Fund.
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