Thursday, July 19, 2012

Week In Review

State Capitol Week in Review         LITTLE ROCK  –  Arkansas will enjoy its annual sales tax holiday on Saturday, August 4 and Sunday, August 5.         On those days, no state or local sales taxes will be collected on clothing items priced less than $100. Also exempt from the sales taxes on that weekend will be accessories such as jewelry, cosmetics and purses if they cost less than $50.         School supplies and art supplies will be exempt from the sales tax no matter how much they cost.         Shoes, boots and sandals are considered clothes, so there will be no sales tax collected on the sale of footwear costing less than $100. The list of exempt clothing is lengthy and includes hats, gloves, bathing suits, formal wear, underwear, coats and jackets, costumes, athletic supporters, raincoats, neckties, uniforms, slippers and scarves.          Diapers, even disposable diapers, will be exempt from the sales tax on the weekend of August 4 and 5.         All retailers are required to participate and may not legally charge a sales tax on the included items.         It doesn't matter how many items you buy, and it doesn't matter if their total cost exceeds $100.  As long as the individual items each cost less than $100, or $50 for accessories, no sales tax will be collected.  For example, you can buy a pair of shoes for $75, plus a pair of pants for $50 and a dress for $50.  Even though the total sale is $175, there will be no sales tax collected.         The accessories exempt from the sales tax will include hair notions, wigs, wallets, watches, sunglasses, briefcases and umbrellas.         The sales tax holiday was enacted by the legislature in 2011.  It is Act 757.  The main purpose is to financially help families get ready for the school year.         The Arkansas legislature has enacted several tax cut measures in recent years, including a reduction of the sales tax on groceries, the sales of used cars and utility costs of manufacturing companies.  About 50,000 low-income parents with two or more dependants were exempted from the state income tax.         A major reason the state has been able to lower taxes is that the legislature adopts very conservative budgets that hold down state agency spending.          Along with a strict balanced budget law, our conservative budgets produced a surplus at the end of the fiscal year and earned Arkansas a top rating from Moody's Investment Service of New York.          Moody's designated Arkansas with an Aa1 rating based on our balanced budget, our long history of strong fund balances and several positive job announcements in spite of the recent economic downturn. Moody's noted that other states ran up massive debt during the economic downturn.             Arkansas was one of only four states to begin the three most recent fiscal years without a projected budget deficit.  We were the only Southern state to do so.             The strong rating from Moody’s Investors Service means that bonds used to fund waste and water systems will have excellent ratings and are more likely to attract investors.  A corollary is that companies looking to locate in Arkansas will notice the state's ability to efficiently finance waste and water systems.        

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