Gov. Sarah Sanders held a press conference on Tuesday to announce two major pieces of legislation aimed at addressing the cost and availability of food in Arkansas. One bill would end the state grocery tax, which currently stands at 0.125%, while the other bill seeks to provide liability protection to donors at food banks. However, this change would only impact the portion of the sales tax that goes to the state, with city and county taxes still applying to groceries.
While the elimination of the state grocery tax may not result in significant savings for consumers, Sanders argues that it is a regressive tax that disproportionately affects low-income individuals. However, the overall impact of eliminating this tax, which brings in $11 million annually, may not be substantial. Despite this, Sanders has received praise for other initiatives aimed at addressing hunger, such as free breakfast for public school students and a summer EBT program.
The potential impact of ending the grocery tax on local governments, which rely on sales tax revenue, remains a concern. There is uncertainty about how the removal of the state grocery tax could affect cities and counties, as their ability to levy sales taxes is tied to state law. Sanders has assured that local governments will not be forced to exempt groceries from sales tax, but the specifics of this arrangement remain unclear.
Should the legislation pass, the tax would not be repealed until January 2026 to allow for the recalibration of digital systems. While some questions remain, Sanders and state agencies are confident in their ability to adapt to the changes.
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