Arkansas Legislature Defeats Internet Sales Tax Plan

Apr 3, 2017

Outside the Arkansas House chamber in the state Capitol building.
Credit Jacob Kauffman / KUAR

A beleaguered bid in the Arkansas Legislature to collect sales taxes from online purchases from companies without a physical presence in the state narrowly failed in the House on Monday. Representative Dan Douglas, a Republican from Bentonville, said it didn’t make sense to collect a tax on his blue jeans at a local store but not when he bought them online.

“They’re the same brand of blue jeans, the same style, the same size, used on the same fat body for the same purpose and they didn’t collect sales tax,” said Douglas. “Now is that fair?”

The bill struggled to get out of committee for weeks. It was besieged by Democrats who wanted revenue dedicated to causes like pre-K and rural emergency services – and by conservative Republicans. Representative Bob Ballinger from Hindsville said he wouldn’t part of any plan to raise taxes.

“We’ll walk out and they’ll [constituents] be paying more money when we get out of session and I just can’t support that,” said Ballinger.

Backers of the bill maintained the tax is already owed but most state residents don’t report online purchases that don’t automatically collect sales taxes. Although the bill failed, Amazon voluntarily began collecting the tax information in March.

SB 140 would have required businesses bringing in more than $100,000 in Arkansas a year to collect the tax or report it to the Department of Finance and Administration. Some questions linger, that if the bill would have passed, if federal courts would decide its constitutionality.

The bill failed 43-50. Republicans control a supermajority in the 100 member chamber.