SB377
To Create The Grocery Tax Relief Act; To Amend The Law Concerning The Sales And Use Taxes Levied On Food And Food Ingredients, As Affirmed By Referred Act 19 Of 1958; And To Exempt Groceries From State Sales And Use Taxes.
Last Action (May 5, 2025): Died in Senate Committee at Sine Die adjournment.
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AI-Generated Summary
Senate Bill 377, known as the 'Grocery Tax Relief Act,' aims to eliminate the state-level sales and use tax on food and food ingredients in Arkansas. The bill provides a mechanism for the Secretary of the Department of Finance and Administration to lower the state tax rate on groceries to zero percent based on specific economic benchmarks related to revenue growth from remote sellers or changes in state revenue deductions. It maintains that local municipal and county taxes on food will remain in effect. The bill also includes technical amendments to tax code sections regarding the Property Tax Relief Trust Fund and the Educational Adequacy Fund to accommodate the potential removal of state-level grocery tax revenue. Additionally, it provides updated guidance for retailers regarding the tax classification of candy and soft drinks.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are all Arkansas consumers, particularly low- and middle-income households, who would see a reduction in the total cost of groceries due to the elimination of state sales taxes on food. Grocery retailers may also benefit from simplified tax compliance processes if the state-level tax is fully phased out.
Who Might Suffer?
The primary entity negatively impacted would be the State of Arkansas, specifically the General Revenue Fund, which would lose the revenue stream currently generated by the state sales tax on food. While the bill includes conditional triggers, any reduction in these tax collections could lead to budgetary pressure on state services, potentially affecting the funding streams associated with the Property Tax Relief Trust Fund and the Educational Adequacy Fund.
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