One of the co-chairmen of a newly created legislative task force on tax policy urged the panel’s members Monday not to make promises about what the panel will or will not recommend, despite political pressure to do so.
Speaking at the first meeting of the Tax Reform and Relief Legislative Task Force, Sen. Jim Hendren, R-Sulphur Springs, said, “What I would encourage all members to do as we look at this is, don’t make commitments and promises about exemptions or policy until we go through the process, because you will get tremendous pressure to do that as we move forward.”
Hendren and Rep. Lane Jean, R-Magnolia, were elected as co-chairmen of the task force at the brief inaugural meeting. The panel also approved its rules and scheduled its second meeting for June 7.
The 16-member task force, created under Act 79 of 2017, is charged with recommending legislation for consideration in 2019 that would modernize and simplify the tax code; make Arkansas’ tax laws competitive with other states’ in attracting new businesses; create jobs; and ensure fairness to all entities affected by the state’s tax laws.
A preliminary report is due in December of this year and the panel’s final report is due in December 2018.
Panel members have said in interviews that part of the panel’s work will be to review existing tax exemptions and decide whether to recommend eliminating some of them, which they have said could help the state afford further reductions of income tax rates.
Gov. Asa Hutchinson won legislative approval of a $100 million income tax cut for middle-income Arkansans in 2015 and a $50 million income tax for low-income Arkansas this year — with the latter tax cut tied to creation of the task force. Hutchinson has said lowering the state’s top tax rate will be one of his priorities if he wins a second term, but he also has said the panel should conduct a comprehensive review of the tax code.
Talking to reporters after Monday’s meeting, Hendren said every tax exemption currently on the books is on the table for review. That is already causing the members to feel some pressure, he said.
“I’ve already gotten calls from a half a dozen lobbyists wanting to protect their exemption, and I know if I’m getting them, everybody else is getting them,” he said.
Hendren said it is too soon to say whether the panel might recommend repealing or preserving any particular exemption.
“I’m certain that not every exemption’s going to be repealed,” he said. “Some of them, I’m certain, make perfect sense. But I’m also certain that we have some that make no sense. We have to go through them all to sort that out.”
Sen. Larry Teague, D-Nashville, noted during the meeting that he previously served on a blue ribbon commission on taxes.
“I don’t recall that a lot came out of that, but I’m optimistic that we will accomplish something,” Teague said.
The blue ribbon commission that Teague served on about 17 years ago reviewed the state’s sales tax exemptions and ultimately recommended leaving all of them in place. The new task force has the more comprehensive mission of reviewing the entire tax code.
Hendren told reporters he is confident the task force’s work will lead to tax reform.
“I don’t like to fail,” he said.