On Election Day, Arkansas voters will be asked if they support “Continuing a One-Half Percent (0.5%) Sales and Use Tax for State Highways and Bridges; County Roads, Bridges and Other Surface Transportation; and City Streets, Bridges, and Other Surface Transportation After the Retirement of the Bonds Authorized in Arkansas Constitution, Amendment 91.”
This is code for writing a permanent 8.33% sales tax hike – which would take the state sales tax rate from 6% to 6.5% – in the state constitution.
“If ‘YES’ wins the vote, the people of Arkansas will see their state sales taxes hiked by about 9%, taking roughly $300 million a year away from residents and shoveling it to the Arkansas Department of Transportation (ARDOT),”said Grover Norquist, president of Americans for Tax Reform, in a recent Townhall OpEd.
In 2012, Arkansas voters approved a “temporary” sales tax hike, which took the state sales tax rate from 6% to 6.5%, on the promise that it would go towards roads and bridges. That tax hike has given the Arkansas Department of Transportation around $2 billion in additional funding over the last several years, and unfortunately for taxpayers, there is little to show for it.
Now, as the “temporary” sales tax hike is finally getting close to expiring in 2023, Arkansans are being asked if they want to raise it again.
“Proponents of the tax hike [Issue 1] have been trying to downplay its magnitude by saying things like ‘it is only a half a percent’ or ‘taxpayers are already paying it, so it is not really a tax increase,’ wrote Norquist. “Those claims are a terrible misrepresentation of the facts.” Norquist explained:
“If Issue 1 is adopted, however, current law would change, and taxpayers would be stuck with the higher 6.5% rate. Permanently. This is, in fact, a tax hike, and not just a small one, as advocates of Issue 1 would like voters to think. Taking the rate from 6% to 6.5%, a 0.5 percentage point increase, is actually an 8.33% tax hike. That increase is much greater than ‘just half a percent.’”
Unfortunately, such efforts to downplay or sneak through tax hikes are not unique to Arkansas. “Politicians across the nation have a favorite trick: pass a ‘temporary’ tax hike, then years later, when taxpayers are ‘used’ to carrying this higher burden, announce it will be permanent,” wrote Norquist. “The politicians hope Arkansans have forgotten their lie that the tax hike would be ‘temporary.’”
If adopted, Issue 1 would result in Arkansas continuing to fight with Louisiana and Tennessee for the unwelcome distinction of highest combined state and local sales tax rate in the nation.
To read Norquist’s full OpEd, click here.