Gov. Asa Hutchinson signed a package of tax cut bills into law Tuesday saying all Arkansans will benefit from the changes. Tax reform was a key priority for the governor during this year’s session of the Arkansas General Assembly.
Included in the legislation is a requirement that, beginning July 1, will require large out-of-state online retailers like Amazon to collect sales and use taxes from in-state buyers.
"It gives us competitive tax rates in Arkansas, which includes what many of the municipalities and small businesses wanted," Hutchinson said, "and this is not impacting the smallest of businesses. It’s those that have $100,000 in sales in Arkansas or 200 transactions."
The Department of Finance and Administration estimates the online tax revenue will generate an addition $35 million in tax revenue by fiscal year 2021.
The changes also include cutting the state’s top corporate income tax rate from 6.9 percent to 5.9 percent. Hutchinson said it will make Arkansas more attractive to major employers and create more jobs.
"I need to emphasize that in the last quarter of last year, Arkansas ranked number five in the nation in terms of personal income growth. This happened because we became competitive in bringing jobs here and good paying jobs here. And so this corporate tax bill helps us to recruit industry," Hutchinson said.
A second bill raises the Homestead Property Tax Credit from $350 to $375. It also increases funding to counties for voting equipment, which is intended to modernize the election process.
Finally, the third bill shifts the ability to collect franchise taxes from the Secretary of State’s office to the Department of Finance and Administration.
The governor was joined by legislative leaders for the bill signing ceremony. Senate President Pro Tempore Jim Hendren, R-Gravette, noted the changes in state tax codes has been years in the making.
"Personally this is a big day because this is the culmination of almost two years of work," Hendren said. "We began working on tax reform almost two years ago with a goal of making it simpler, fairer and making Arkansas more competitive. And the three bills that you see here accomplish all of those goals."
Lawmakers are expected to wrap up the session on Wednesday, then return to the Capitol later in the month for a formal adjournment.