From Washington and Miller counties: Can local govt's abolish local sales taxes?
City and county officials from Washington and Miller counties have inquired as to whether they can reduce or abolish the local sales tax on certain items (mainly groceries). It's especially a hot topic locally, where Texas-side shoppers purchase groceries tax free, and the taxes when purchasing groceries on our side of state line are as follows:
The local governments have the theory that abolishing the local sales taxes will increase revenue in the long run since shoppers aren't likely to cross the state line over 4% (and maybe 3% if the governor's latest proposal is signed into law). These local governments believe they can actually generate more revenue from the items purchased that don't fall under the category of food and food ingredients than they can generate under the current system. That's a correct belief, in my estimation.
However, local government are prohibited from reducing or abolishing taxes on specific items, as it violates the agreement Arkansas entered into with other states when it enacted the 2003 Streamlined Sales Tax Act.
Arkansas state tax: | 3% |
"In Lieu Of" Tax | 1% |
Miller County tax: | 1.5% |
Texarkana muni tax: | 1.5% |
Total tax: | 7% |
The local governments have the theory that abolishing the local sales taxes will increase revenue in the long run since shoppers aren't likely to cross the state line over 4% (and maybe 3% if the governor's latest proposal is signed into law). These local governments believe they can actually generate more revenue from the items purchased that don't fall under the category of food and food ingredients than they can generate under the current system. That's a correct belief, in my estimation.
However, local government are prohibited from reducing or abolishing taxes on specific items, as it violates the agreement Arkansas entered into with other states when it enacted the 2003 Streamlined Sales Tax Act.
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