HB1661
To Repeal The Sales And Use Tax On Food And Food Ingredients; And To Exempt Food And Food Ingredients From Sales And Use Tax.
Last Action (May 1, 2023): Died in House Committee at Sine Die Adjournment
Sponsors
AI-Generated Summary
House Bill 1661 proposes the total repeal of the state-level sales and use tax on food and food ingredients in Arkansas. The bill removes existing provisions that levied a reduced tax rate on groceries and repeals related sections in the Arkansas Code that governed the distribution of those tax revenues. By amending state tax statutes, the legislation effectively exempts groceries and food ingredients from the state's gross receipts tax. The bill also includes technical conforming changes to ensure tax collection processes are adjusted to reflect this new exemption. It maintains existing definitions for food, food ingredients, and prepared food to differentiate taxable items. The bill does not explicitly repeal local municipal or county sales taxes on food, which remain subject to local regulation. The primary objective is to lower the cost of food for consumers by eliminating the state's portion of the sales tax burden.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill are all consumers in Arkansas, particularly low-income individuals and families who spend a larger percentage of their household budgets on groceries. By removing the state sales tax on food, these households would experience a direct reduction in their daily living expenses, effectively increasing their disposable income.
Who Might Suffer?
The primary entity negatively impacted by this bill is the State of Arkansas government, specifically state agencies and funds that rely on sales tax revenue for their budgets. Because the bill repeals the tax on food and food ingredients without explicitly identifying a replacement revenue source, the state would face a reduction in general revenue, potentially impacting funds such as the Educational Adequacy Fund and the Property Tax Relief Trust Fund.
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