An end to truckers’ support for an increase in Arkansas’ diesel tax to support $1.1 billion of road bonds could mean a tax increase for trucking companies.
Gov. Mike Beebe said last week he would seek a repeal of a sales tax exemption on trucking equipment after the Arkansas Trucking Association withdrew its support of a statewide vote on the plan to increase the diesel fuel tax by five cents a gallon.
The trade association said voters would reject the tax increase.
Beebe said the tax exemption was part of the legislative deal sought by the trucking group to compensate for the higher fuel tax. Without the revenue from the fuel tax, Beebe said, the state highway department would have less money for needed road repairs.
The sales tax exemption on new trucks and trailers would cost the state $4 million a year.
House Minority Leader Rep. John Burris, R-Harrison, said trucking industry executives testified they would support a repeal of the exemption if voters did not support the fuel tax increase.
However, ATA president Lane Kidd said the sales tax exemption and the fuel tax increase are not related.
“This exemption makes Arkansas competitive, as a place for trucking companies to call home,” Kidd said. “There are currently 38 other states with similar exemptions.”
“If necessary, we look forward to debating the merits of this law when the Legislature convenes in January,” Kidd said.
Rep. Larry Cowling, D-Foreman, sponsored the sales tax exemption legislation but said he would vote to repeal it without the fuel tax increase. Cowling, who owns a trucking company, said the industry knew the two issues were connected.
The bonds supported by the fuel tax increase would provide funds to expand and maintain the interstate highway system in Arkansas.
The General Assembly will meet January 2012 for a fiscal session.