A bill in Arkansas designed to help truckers who live in the state but base plate elsewhere has lost a key provision after an opinion by the state's attorney general.
However, the bill will still cut future sales taxes paid by truckers when they buy a rig, and proponents of the measure expect court action may yet provide homebound Arkansas truckers some relief.
HB1030 would have given truckers who live in the state but base plate elsewhere a chance to come home without paying back taxes. The bill would also cap future state sales taxes on the purchase of tractors and trailers.
The Arkansas House of Representatives passed the bill Jan. 29, voting 84-13. The bill was before the Senate Revenue and Tax Committee when the attorney general's opinion was delivered.
According to a report from the Arkansas News Bureau, Attorney General Mike Beebe contends lawmakers cannot, under the state's constitution, give Arkansas-based companies who register their vehicles in other states a break on back taxes when they return their registration to Arkansas.
Beebe's action led Rep. Don House, D-Walnut Ridge, one of the bill's primary sponsors, to remove the provision forgiving back taxes. Early estimates had placed some truckers' liabilities above $6,000 per vehicle.
Officials at the Arkansas Department of Finance and Administration have long contended the truckers would owe the back taxes when the companies or individuals moved their truck registrations back to Arkansas. The department contended that base plating out of state was illegal for Arkansas residents and that the bill's relief provision would cost the state millions in taxes.
However, supporters say the state is not collecting the money now. As a result of the current setup, only 8 percent of the more than 83,000 large trucks whose owners are residents of Arkansas register their vehicles in that state. For semi-trailers, the figure is even lower - 2 percent. The trucking industry employs more than 110,000 people in the state.
Some truckers and trucking officials have said they would have to either move out of the state or declare bankruptcy if the back taxes were levied.
"We found that is just being totally repressive and devastating to those small truckers, which are usually small mom and pop operators," Rep. House said of the effort to collect back taxes. "It's going to force some of them out of business and it's going to cause others to have to sell their rigs and drive for someone else."
The only remedy available now for the state's truckers, Rep. House said, "is a constitutional amendment or a court action."
"We have tried the legislative remedy; it has not worked," Rep. House said. "So on behalf of the little guys, the little operators, we have pressed this as far as we can."
A court case is almost inevitable. Rep. House said his contacts in the industry have indicated a case is likely. And Lane Kidd, president of the Arkansas Trucking Association, told the Arkansas News Bureau his group might file suit if relief was not forthcoming from the state for the trucking industry.
"What our truckers will have to do is they'll have to get a federal magistrate to say this federal law supercedes Arkansas law," Rep. House said. "If they do, then they win."
The truckers' case for relief may be bolstered by the International Registration Plan, or IRP, a registration reciprocity agreement among states and provinces providing for payment of license fees on the basis of total distance operated in all jurisdictions.
In a letter sent to Arkansas officials Jan. 27, Robert Pitcher of IRP Inc. said Arkansas truckers who had previously base plated in states such as Oklahoma had done so legally under the multistate agreement's rules at the time.
"This letter is to inform you that the board has never taken a position that motor carriers registered under Oklahoma law as in effect prior to April 15, 2002, were not legally registered, or that registrations issued to such carriers were invalid under the plan," Pitcher wrote in the letter.
While amnesty for homebound truckers is up in the air, HB1030 is still headed to passage, and still holds provisions that will help truckers in the future.
The bill still caps the sales tax on trucks bought or sold in the state. If the bill passes, only the first $1,000 from the sale of a truck will be taxed in the future and only the first $500 from the sale of a trailer will be taxed.
Rep. House said that under current rates, the bill would cap the state sales tax on a truck at $51.25 and on a trailer at $25.63.
The bill's sales tax limitations do not apply to city or county sales taxes; however, those taxes are also capped, applying to only the first $2,500 of a sale. Most cities and counties have a sales tax of only 1 to 1.5 percent, meaning most truckers would pay $60 or less for city and county sales taxes combined.
Under the old law, sales taxes are much higher. A trucker who purchased a $70,000 tractor and a $20,000 trailer would have paid more than $4,600 in sales taxes to the state alone. The Department of Department of Finance and Administration has said it intends to levy the full state tax on any truck purchased by an Arkansas owner during the past three years, plus interest and penalties.
While the battle over sales tax rages on, Rep. House continues to press for relief for the state's truckers, and to contend that current law in the state is harmful to the industry.
"I think we have a bad law," Rep. House said. "We make laws; we're just men. Sometimes we make laws that get out of date, and sometimes we make laws that are repressive.
"This law, however it came about, is repressive to the industry."
--by Mark H. Reddig, associate editor