Highway Finance: New Revenue Subcommittee – November 18, 2009

Posted on November 18th, 2009

10:35 pm – The meeting was called to order by Chairman Jim McKenzie. The minutes from the October 14, 2009 meeting were approved.

10:37 pm – The first discussion is about the removal of the sales tax exemption from motor fuels. Bill Sample made the point that this would be almost impossible to implement at the retail level due to a need to change out gas pump systems to account for the tax. The chairman then suggested that the tax be levied at the wholesale level. A tax at the wholesale level will probably require a ¾ super majority.

10:43 pm – Dan Flowers makes the point that other states have a sales tax on motor fuel so he feels like it could be implemented in Arkansas.

10:45 pm – The reason this committee keeps coming back to removing motor fuel sale tax exemption is because it has the potential to raise a hell of a lot of money. It would also track rising fuel prices so that as fuel prices rise, the tax revenue would also rise probably proportional to construction costs.

10:48 pm – The reason that there is a sale tax exemption on motor fuels is because that would be a tax on taxes. Since we already have a tax on our taxes on fuel, that would be a tax on the tax on the taxes on motor fuel. See how ridiculous government’s quest for more and more money can become?

10:53 pm – The removal of the sales tax exemption will make your fuel cost about 15 to 18 cents more per gallon.

10:54 pm – The staff attorney is saying that to pass a “Carbon Tax” would only take a simple majority because it is a “new” tax and therefore gets through the loophole that the courts carved in the Constitution against it’s original intent. Rep. Bill Sample asks how we can spend an environmental tax on highways.

10:59 pm – Apparently the “streamline sales tax” is causing trouble for using sales tax as a new revenue source. I am not exactly understanding why, has something to do with trade-offs would not work in favor of Arkansas and perhaps result in a potential revenue loss rather than gain.

11:03 pm – We are being shown a video talking about a per miles traveled tax. They are discussing the system Oregon tried that included a GPS system installed on your car. In that test, a person that got more miles per gallon in fuel efficiency than 20 mpg had to pay more taxes than they would have under the old tax system. Apparently the ACLU has expressed concern about the GPS violation of privacy, for once I have to agree with them.

11:10 pm – What I have to wonder is how would you challenge Big Brother, if the machinery overcharged you in taxes? How would you get a refund?

11:14 pm – The current recommendation is that Arkansas be prepared to go to a VMT (Vehicle Miles Traveled) tax by 2020.

11:18 pm – It must be noted that the goal of this committee is not necessarily in the best interest of the people. Their goal is to craft the most likely method of taxation that could get passed that also produces the most revenue. As a representative of the people, one thing that I would be against is collecting a VMT at the gas pump. Furthermore, I would be opposed to creating automatically increasing taxes that do not require legislative action to maintain the revenue stream.

11:22 pm – Taxes should always be transparent to the taxpayers rather than hidden for convenience, and ANY increases should always be approved by the taxpayers representatives in the the legislature or by a direct vote of the people. Any taxes presented to the public for a specific project and upon which they base their assent to the tax should have ALL the associated revenues dedicated to that specific project and be prohibited from use in the general revenue stream.

11:28 pm – The current discussion is about indexing the fuel tax rates. I am categorically opposed to indexing taxes. Those in power should always be made accountable to the people and should always have to come back to the people to continue taking their revenue. To attempt to index taxes is a way to circumvent the process and make it easier to maintain tax revenues without being held accountable to the taxpayers.

11:34 pm – Rep. Allen Maxwell is suggesting that a potential revenue source would be to allow the mining of Arkansas’s lignite coal. His proposal to develop lignite to produce liquid fuels for highway use. Assuming one lignite mine in Clark County, one lignite mine in Dallas County, and a lignite-synfuel plant in Nevada County, lignite could add $600 million to Arkansas’s $80 billion GSP. This results in an increase in GSP of 0.75% The increase in tax revenues could be $28,150,000 per year, with the potential for much more.

11:47 pm – The committee voted to not pursue the VMT further.

11:48 pm – Committee adjourned.

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3 Responses to “Highway Finance: New Revenue Subcommittee – November 18, 2009”

1. Harold M. Says:
   November 18th, 2009 at 10:13 pm

   Hopefully that idea of a VMT has died. I’m already thinking about moving to Texas because of the income tax. That would be the last straw. Has this committee lost their collective minds?

2. Mark Martin Says:
   November 19th, 2009 at 10:12 am

   Harold,
   
   They voted to not pursue the VMT for now, but the clear consensus was that it would be something that would be pursued in the future.
   
   The new revenue subcommittee seems to be very much out of step with the general population. However, there are some real potential in some ideas going on in the revenue transfer subcommittee. However, those ideas will be violently opposed by the bureaucrats and other agencies that will no longer be able to get as large of a cut from the hog trough of general revenue.
   
   The voters need to be watching this closely, this is where your next tax increase will come from if they don’t put a stop to it now and fight for other options for funding highways right NOW. If the voters don’t step up to fight this, when the tax increase proposal gets made it will be too late to stop it. That train will have left the station.
   
   Thanks for commenting on my blog,
   
   Mark Martin

3. Harold Says:
   November 23rd, 2009 at 11:37 am

   Thanks for keeping us updated on your blog. This is something that definately bears watching.