Revenue & Tax Committee – June 18, 2009
Posted on June 18th, 2009
Date & Time: Wednesday, June 18, 2009 at 1:30 PM
Location: Room 151, State Capitol Little Rock, Arkansas
Agenda: http://tr.im/oXf3
Attachments: none
1:39 pm – Meeting has not started yet. Committee room is quite full. The committee will be adopting interim study proposals today.
1:42 pm – Committee called to order.
1:44 pm – Most of all the interim study proposals are bills that failed to pass during the last session.
1:45 pm – Senator Teague moved that ALL proposals be approved for interim study. Motion passed.
1:47 pm – Rep. Mike Burris is currently presenting Interim Study Proposal 2009-54. It is based upon his bill HB1802 of 2009 to provide that the sales of machinery or equipment and related attachments used for the harvesting of timber shall be exempt from the sales and use tax. The revenue impact is $880,000 in annual state sales tax loss and and a $5,000 local sales tax loss. The timber industry currently does not have some of the same exemptions that other agricultural interests have. This proposal may go beyond current farm exemptions.
1:59 pm – Apparently IPS 2009-054 only deals with harvesting equipment and does not cover other areas of the timber farming. Sen. Terry Smith wonders if something may be missing from the study.
2:01 pm – Rep. Pennartz and Rep. Burris are currently discussing the effects of dynamic scoring to support the need and effects of this proposal! I am surprised to hear that kind of discussion coming from Democrats since they are dead set against using dynamic scoring as a standard practice.
2:04 pm – Senator Malone, the chairman, is suggesting a study to evaluate the competing exemptions in surrounding states. Senator Teague, the original sponsor of agricultural tax exemptions while he was in the house, is discussing the need to study the entire list of agricultural exemptions.
2:11 pm – Rep. Garner is asking why the timber industry was specifically not exempted by legislation. There is very little institutional memory due to term limits. Nobody has a definite answer. I suspect it is because the amount of the tax cut was too big to be able to pass, and since the timber industry has less representation in the legislature, then they were the ones cut out of the bill. Senator Capps believes some of it was because we were seeking to match the exemptions in surrounding states.
2:15 pm – The timber industry did not have an association in 1987 when this exemption was passed, so they did not have a lobbyists at the time it passed. I would say that about explains it.
2:24 pm – This tax is making Arkansas timber harvesters less competitive compared to competitors out of state. The cost of the tax is almost equal to the amount of the down payment. This often requires the short term financing of the tax itself.
2:38 pm – ISP 2009-54 adopted for study. Committee adjourned
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