SPECIAL REPORT: Bill to cut sales taxes on trucks in Arkansas headed for approval

| 3/13/2003

A bill that would cap the sales tax on trucks in Arkansas is likely to be passed by the state's Senate today (March 13), the bill's chief sponsor told Land Line.

HB1030 passed the Senate Committee on Revenue and Taxation March 12. The Senate amended the bill on the floor the same day, increasing the amount of the tax truckers would pay, but still cutting it to as little as one-tenth what it would be under current law.

The Senate is scheduled to take a final vote on the bill at 1:30 p.m. March 13, and is expected to pass it, Rep. Don House, D-Walnut Ridge, the bill's chief sponsor, said. After that, HB1030 would move back to the House to have the Senate's changes approved. House approval is also considered very likely.

"We don't expect any problem in the House," House said. "We think it will just be a matter of formality."

"This is a big victory for the truckers."

The new version would charge the state's sales tax on the first $9,150 of the value of a tractor and on the first $1,000 of the value of a trailer. House said that would make the tax on a trailer $51.25, and the maximum tax on a tractor $469. The original version of the bill would have applied the tax to $1,000 of the tractor's value and $500 of the trailer's value, creating a tax bill of about $75.

The new version does not address the issue of Arkansas truckers who have been base plated in Oklahoma. The state's Department of Finance and Administration has indicated it will collect back taxes on truckers who return to Arkansas if they purchased their trucks in the past three years. Those truckers could face tax bills of up to $6,000.

The bill had contained an amnesty provision, allowing those truckers to return to the state without paying back taxes. The Arkansas attorney general issued an opinion that the amnesty was unconstitutional, and it was removed.

The changes to the bill were caused in part by the state's revenue shortfall. Lane Kidd of the Arkansas Trucking Association told Land Line earlier this month that initially, it was estimated that the original version of HB1030 would cause a shortfall of $3 million to $4 million a year in the state treasury. A number of compromises to make the bill revenue-neutral were suggested, then rejected.

 "We're trying to figure out a way that we can make it revenue neutral because Arkansas, like everybody else, is having a heck of a time with their finances," Sen. Jerry Bookout, D-Jonesboro, who is guiding the bill through the Senate, said. "We're trying to figure a way we can entice the truckers to come back home . We'd like for them not to have to pay sales tax at all."

However, the new amendment "makes it revenue neutral for our state, and of course, we, as many states, are having a terrible deficit problem," Rep. House said. "That has made it very difficult to get the bill passed."

HB1030 passed the House 84-13 on Jan. 29. But it apparently stalled in the Senate, where a vote by the full body was recently delayed and it was referred back to the Senate Committee on Revenue and Taxation Feb. 25.

The timing of the bill was considered critical for Arkansas truckers who had base plated out of state in the past. Oklahoma officials had not been allowing out-of-state truckers to renew their Oklahoma tags until they settled their policy on owner-operators. The Oklahoma tags were scheduled to expire March 1, forcing truckers to return their tags to their home states.

But that looming deadline is no more. The Oklahoma Tax Commission sent a notice Feb. 26 extending the March 1 registration deadline to April 1, 2003.

Officials of the International Registration Plan, or IRP, have indicated the trucker's previous plates were not illegal - which would mean they would not owe back tax in Arkansas. The IRP is 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.

--by Mark H. Reddig, associate editor