2007 Fiscal Survey of States: Arkansas enacted nation's largest sales tax cut

The National Governors Association and the National Association of State Budget Officers jointly released the semiannual Fiscal Survey of States today, which reports that states in 2008 will have less money in their reserves than in the previous two years, and some already are reporting shortfalls. Mike Stormes of Arkansas is president of the NASBO. For FY2008, 24 states cut personal income taxes by $1 billion, but eight others raised cigarette and tobacco taxes by nearly $762 million. In comparison, states last year cut taxes and fees by $2.1 billion – the first time tax cuts have outweighed increases nationwide since 2001.

The report states that Arkansas enacted the largest sales tax cut in the country, which includes the 2007 cuts in sales tax on food and food ingredients, the reduction in sales tax on manufacturers’ natural gas and electricity, and the tax exemption of dyed diesel fuel, collectively resulting in a sales tax cut of $179.9 million annually (see p. 22 of the document -- p. 13 of the report).

Click here for the report