Arkansas Tax Reform Task Force Gearing Up

The Arkansas Tax Reform and Legislative Relief Task Force convened for the first time on May 22. Its membership had been set the prior week based on appointments from House Speaker Jeremy Gillam, Senate President Pro Tempore Jonathan Dismang, and other legislative leaders.

The proceedings of the first meeting of the tax reform task force were largely perfunctory. The co-chairs of the task force were nominated and approved: Senator Jim Hendren and Representative Lane Jean. The task force members then introduced themselves. In doing so, many made general statements about improving the Arkansas tax code and business climate. The task force adopted procedural rules and expense reimbursement policies. The meeting then concluded.

The next meeting is scheduled for the afternoon of June 7. The Bureau of Legislative Research (BLR) is preparing a report on the Arkansas tax system that will likely identify existing tax exemptions and their associated costs. Department of Finance and Administration leadership and staff may also be involved in this initial report.

Thus far, the makeup of the task force and its chairs seem to indicate a direction of incremental reform instead of radical changes. However the dynamic remains to be seen after the task force begins considering substantive issues.

Business taxpayers and industry groups should be evaluating their current Arkansas tax positions and considering what exemptions and credits are important. The concern is that critical credits and exemptions may be put "on the table" as revenue offsets to pay for income tax rate reductions.

At the same time, there are many sound policy changes that Arkansas could  make to improve the business climate. Rather than just "playing defense," taxpayers should also be considering supporting affirmative changes to the tax code to make the state more competitive. The time to put forward proposals is in the next few months; the preliminary report of the task force will be due December 1, 2017. 

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