The Arkansas state sales tax on groceries would drop under a bill that links the rate to debt service on the state’s outstanding bonds.
Senate Bill 135 filed by Sen. Jason Rapert, R-Bigelow, would authorize the state’s chief financial officer to lower the tax rate if debt service on some outstanding bonds and school desegregation costs fall below $35 million for six consecutive months.
Gov. Mike Beebe proposed the tax cut in his fiscal 2014 budget presentation.
The targeted debt includes water, water disposal, and pollution facilities bonds authorized by lawmakers in 2007 and higher education facility improvement bonds issued under a 2005 law.
The tax rate on groceries has been reduced to 1.5% from the 6% levied in 2006.
If the stipulations are achieved, the grocery sales tax rate would drop to the 0.125% constitutionally dedicated to game and wildlife conservation.
The proposal would not affect city sales taxes on groceries.