Daily Legislative Update

 

Wednesday, March 18, 2009
66th Day of the 87th General Assembly

SPECIAL EDITION

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TAXPAYER BILL OF RIGHTS--support

SB 769 by Sen. Larry Teague and co-sponsored by Rep. Keith Ingram received a Do Pass recommendation from the Senate Revenue and Taxation Committee this morning. It will be amended tomorrow and considered on the Senate floor Monday. Please contact your state senator and encourage them to vote for SB 769.

This bill provides uniform guidelines for the “rule of strict construction” of tax statutes. Under this rule, taxpayers have the burden of establishing they are entitled to tax exemptions. We have no problem there. However, Arkansas courts have adopted an extreme interpretation of this rule, which has given the Arkansas Department of Finance and Administration a substantial advantage over taxpayers, compared to taxpayers in other states. This extreme position is characterized by the phrase that taxpayers must prove their right to exemption “beyond a reasonable doubt.” As a result, the courts have overlooked well-settled principles that provide balance to the rule, such as applying the accepted meaning of words, and looking to legislative intent when doubt exists. If these principles are ignored, then Arkansas taxpayers’ burden becomes more severe than in other states. This encourages auditors to take very restrictive tax positions on audit.

The bill clarifies that exemptions must be interpreted fairly; and not interpreted so restrictively that they fail to serve their intended purpose. This bill would make Arkansas law more consistent with the law in other states.

For example: In the manufacturing sector, there is a sales and use tax exemption if a taxpayer replaces a machine in its entirety. What about replacing a paper machine in a paper mill? A paper machine is as long as a football field. It is also made up of a large number of smaller machines. Does this exemption mean that a paper company must replace a $200 million machine “in its entirety?” Or does it mean that machines within the machine may be replaced tax exempt? This is when the bill would come into play to clarify that DFA and the courts must interpret exemptions in a manner that makes sense, and in a manner consistent with the legislative intent of keeping manufacturing plants competitive; and not just say that the paper company must prove its entitlement “beyond a reasonable doubt,” and “to doubt is to deny the exemption.”

ENERGY EFFICIENCY STANDARDS--oppose

HB 1903 by Rep. Joan Cash would create the Energy Efficiency Performance Standards Act of 2009, which would require electric and gas utilities to implement energy efficiency programs for customers to meet minimum energy efficiency performance standards. The bill would also allow cost recovery of up to 2% of all utilities total revenue. We estimate this amount to be up to $72 million per year paid by utility customers. From a business perspective this would have the same impact as a tax increase. Please contact members of the House Insurance and Commerce Committee and encourage them to vote against HB 1903.

Members of the committee are Eddie Hawkins—Chair, Fred Allen—Vice chair, Bill Abernathy, Eddie Cooper, David Dunn, Frank Glidewell, Rick Green, Willie Hardy, Johnny Hoyt, Barry Hyde, Keith Ingram, Wilhelmina Lewellen, Buddy Lovell, Bruce Maloch, Mark Martin , Allen Maxwell, David Rainey, Charolette Wagoner, John Paul Wells and Jon Woods.

Please visit our tracking site here for the complete, searchable list of bills being tracked. The full text of each bill is also available at the site.

CONTACT INFORMATION

State Senators: 501-682-2902
State Representatives: 501-682-6211
State Chamber/AIA Staff
Randy Zook, President/CEO: rzook@arkansasstatechamber.com
Kenny Hall, Executive Vice President: khall@arkansasstatechamber.com  
Angela DeLille, Director of Governmental Affairs:adelille@arkansasstatec hamber.com
State Chamber/AIA phone: (501) 372-2222
State Chamber/AIA web site: www.arkansasstatechamber.com