Arkansas sales tax on used vehicles, trailers, and semi-trailers priced between $ 4,000 and $ 10,000 now 3.5%

The state sales tax rate paid by buyers of used vehicles, trailers and semi-trailers priced between $ 4,000 and $ 10,000 fell to 3.5% on Saturday, thanks to a state law passed in 2021.

The previous rate was 6.5%. Vehicles priced under $ 4,000 are already exempt from sales tax.

Bill 1013 – sponsored by Representative John Payton, R-Wilburn – is planned by the Department of Finance and State Administration to cut state tax revenues by $ 6.5 million over the course of fiscal year 2022, which ends June 30, and $ 13.1 million in fiscal year 2023..

The lower rate, however, does not affect the collection of city and county sales taxes, according to the finance department.

In fiscal year 2021, the state collected $ 298.4 million in used vehicle sales tax revenue.

By comparison, in the same fiscal year, the state collected $ 215.8 million in tax revenue from new vehicle sales, said Scott Hardin, spokesperson for the finance department.

The average price of used vehicles purchased in Arkansas in fiscal 2021 was $ 13,437.89, Hardin said.

Comparable information for previous years was not available, he said. Determining the numbers for the 2021 fiscal year alone took about three days for state officials to compile the data because they have to manually review individual data rows, he said.

New car sales in Arkansas and the rest of the country suffered from the lack of vehicles. Manufacturing problems have resulted in a shortage of computer chips and other materials needed to produce new vehicles. The shortage of new vehicles has driven up demand for used vehicles.

Law 1013 embodies Governor Asa Hutchinson’s plan to reduce the sales tax on used vehicles, trailers and semi-trailers priced between $ 4,000 and $ 10,000 by 3%. Earlier this year, Payton described it as a compromise with the Senate.

Hutchinson said the opportunity tax reduction will help ease the tax burden on lower and middle class families.

“For this reason, these people can now afford a more reliable vehicle that can last longer and require less maintenance,” the Republican governor said in a written statement.

Asked why Law 1013 is a better policy than exempting the first $ 10,000 of a used vehicle, Hutchinson said, “By reducing the rate from $ 4,000 to $ 10,000, we have granted tax relief to many Arkansans with a reasonable impact on state revenues.

“Additionally, we have provided tax relief and avoided a tax cliff in which a price difference of one dollar can cost the taxpayer hundreds of dollars in sales tax,” he said.

Payton said he had fought for tax relief on used vehicle sales for several years in the legislature.

“I feel good that we have done something, but it has not satisfied what needs to be done,” he said.

“If I am elected to the Senate, I will certainly introduce a bill to raise this issue [sales tax exemption for used vehicles]said Payton, who announced his intention to challenge State Senator James Sturch of Batesville in the May Republican primary election.

Payton said he owned two used car lots in Heber Springs and Searcy, and “I can’t say [the law] help my business.

“Most of our business is above that price bracket anyway,” he said. “There are very few that are priced under $ 10,000. “

During the 2021 regular session, the House of Representatives voted 97-0 to approve Payton’s House Bill 1160, which would have increased the sales tax exemption for used vehicles for those priced below to $ 4,000 to those priced under $ 7,500, and then to those priced under $ 10,000. two years later.

“I think it’s only reasonable for the state to allow… hardworking, salt-of-the-earth Arkansans to buy these more reliable cars duty-free,” Payton told House Revenue. and Taxation Committee during the session.

The Ministry of Finance predicted that the bill would reduce state tax revenue by $ 9.5 million in fiscal year 2022, gradually increasing to $ 28.4 million in fiscal year 2025. .

The Senate Revenue and Taxation Committee amended code HB1160 to exempt used vehicles priced between $ 4,000 and $ 7,500 from state sales tax. Pro Tempore Senate Speaker Jimmy Hickey R-Texarkana said he was concerned the bill would cause car dealers to raise the price of used vehicles to just below the $ 7,500 threshold and that it would hurt to consumers. But Payton countered that the problem is the supply of used vehicles that are priced under $ 7,500. The bill never got out of committee until the end of the session.

The difference in conflicting used vehicle tax proposals contributed to the difficulty of voting for an unrelated bill.

The bill granting spending authority to the Arkansas Medical Services Division failed to reach the three-quarters vote required for approval in the House of Representatives on four occasions during the 2021 regular session before the House approves the credit. The credit provided spending authority for the state’s Medicaid program.


Source link

Comments are closed.