This week the Arkansas Legislature pushed forward a bill to collect sales taxes on out of state, online purchases. Some retailers, like Amazon, say they support the move and will preemptively start collecting taxes in March.
Governor Asa Hutchinson is roundly praising Amazon’s announcement that the Seattle-based company wants sales tax be collected for online retailers and will voluntarily help collect them. In a statement, the Republican said the company’s decision is “laudable and good news for the state.”
Amazon sales taxes are already collected in 38 states - but in each of those the company has a physical presence. It does not in Arkansas. Current law says Arkansans are supposed to self-report online purchases and pay sales taxes but few residents take those steps. A bill by Senator Jake Files of Fort Smith would require the company to collect that data and to send it to state tax officials.
The governor said in addition to encouraging fairness between brick and mortar and online stores it’ll be a helpful revenue stream for the state. Hutchinson said he hopes the additional tax revenue can be turned into income tax cuts in the future.
Some business analysts note Amazon can better afford to comply with regulations to collect the tax than smaller competitors.
The governor's full statement is below.
“The announcement from Amazon to start the sales tax collection for Arkansas in March is laudable and good news for the state. Arkansas will join the other 38 states in which Amazon is collecting and remitting sales tax. This step by Amazon has been voluntary and reflects the new landscape in which retailers recognize the practicality and fairness of sales tax being treated equally between online sales and in person store sales. This decision also shifts the responsibility of sales tax payment from the customer to the retailer at the time of checkout—providing further clarity and efficiency to the current and often misunderstood Arkansas law.
“As everyone knows, lowering our state’s income tax rate has been a priority of mine from day one. This strengthened revenue stream will allow us to continue to make progress in cutting the income tax rate, making Arkansas more competitive with our surrounding states, and putting money back into the pockets of hardworking Arkansans.”