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Arkansas committee approves bill capping local sales tax on vehicle leases
Summary
A House member said shifting the tax obligation from manufacturers to lessees would reduce monthly lease payments; Department of Finance and Administration staff said the bill caps local sales taxes on lease streams at $2,500 and would not change the 6.5% state sales tax. The committee voted to pass the bill by voice vote.
Representative Jeff Wardlaw introduced House Bill 1960 and the committee voted to pass it by voice vote.
Wardlaw said the bill moves responsibility for certain taxes from vehicle manufacturers to individuals who lease vehicles, which he said would lower monthly lease payments by roughly $75 to $100 for lessees. "You're just moving the responsibility of the taxes to the individual," Wardlaw said, adding the change would make Arkansas more competitive with neighboring states that lease a higher share of vehicles.
Department of Finance and Administration staff told the committee the bill would cap local sales taxes charged on the lease stream at $2,500. Paul Gehring, Department of Finance and Administration, said the 6.5% state sales tax rate would not change and the state sales tax remittance on lease payments would continue. "The cap ... would only affect the local sales taxes that are collected on the lease stream," Gehring said.
The committee chair asked for further questions; none were raised. Wardlaw closed and the committee took a motion to pass. The chair called for the voice vote; the bill was announced as passed.
The discussion consisted of the bill sponsor's explanation and the DFA fiscal clarification; no outside testimony was recorded for or against the bill in the transcript.
