Arkansas House Bill HB1194

Arkansas 2023 Regular Session

• Introduced: 1/23/23
• Refer: 1/23/23
• Failed: 5/1/23

Caption

To Exempt A Manufacturer's Rebate On A Motor Vehicle From Sales And Use Tax; And To Exclude A Manufacturer's Rebate On A Motor Vehicle From The Definition Of "sales Price" Used For Purposes Of Determining Sales And Use Taxes.

Impact

If enacted, HB1194 would have a significant impact on state tax revenue generated from vehicle sales, as it specifically excludes manufacturer's rebates from the taxable sales price. Proponents argue that this change encourages automotive sales by making vehicles more affordable for consumers, potentially stimulating economic activity within the automotive sector. However, some concerns have been raised regarding the overall fiscal impact on state budgets, as decreased tax revenue from vehicle sales may lead to reductions in funding for essential public services.

Summary

House Bill 1194 aims to exempt manufacturer's rebates on motor vehicles from both sales and use taxes in Arkansas. This legislation modifies existing definitions in the Arkansas Gross Receipts Act and the Arkansas Compensating Tax Act to clarify that such rebates do not contribute to the calculation of sales prices for tax purposes. The bill is intended to provide financial relief to consumers purchasing vehicles by reducing the tax burden associated with manufacturer incentives and discounts.

Contention

Discussions surrounding HB1194 have highlighted differing perspectives on its fiscal implications. Supporters, primarily from the automotive industry and consumer advocacy groups, express that the bill will enhance consumer purchasing power during vehicle transactions and stimulate economic growth in the automotive market. Conversely, skeptics worry that this tax exemption may exacerbate budgetary constraints at the state level, jeopardizing funds needed for transportation infrastructure and other public services. The debate captures a tension between fostering economic incentives and maintaining fiscal responsibility within state governance.