Our View

Our View

‘Tis the season to talk about taxes

In this time of retail evolution when tech giant Amazon, an American electronic commerce and cloud computing company, has revolutionized the way we shop, never has conventional brick-and-mortar retailers faced such a financial crisis.

Amazon, and now Walmart’s aggressive e-commerce business model, along with scores of others, are having a major impact on states,, such as Arkansas, that depend on taxes generated from retail businesses within the state.

While Amazon has agreed to collect sales taxes from Arkansas shoppers retail sales tax collections have been affected, a situation that state lawmakers are taking very seriously.

We all realize that Arkansas is heavily dependent upon all sorts of taxes, from corporate, personal property, property, retail sales taxes and many other forms of taxation.

With that said, Arkansas also has in play scores of tax exemptions for everyone from farmers, homeowners to businesses, resulting in millions upon millions of dollars the state is simply not collecting.

Currently, leaders of the recently formed Legislature’s tax overhaul task force are looking into all the exceptions as well as how the state taxes businesses and individuals.

As we pointed out in the very beginning, brick-andmortar retailers are facing difficult times and how they are being taxed plays a vital role in their ability to compete and make a profit.

We’re encouraged to learn that this tax task force is seriously looking into the possibility of repealing the property taxes levied on business inventory.

We’re told this tax raises about $65 million a year with about $50 million going to pubic schools and the rest going to cities, counties and other forms of local government.

Only 10 states tax business inventory, which many of us consider this to be very burdensome on retail stores and other businesses that are required to store large amounts of merchandise.

If state lawmakers are seriously concerned about lending a helping hand to the brick-and-mortar retailers in Arkansas they need to recognize the battle they’re facing in being able to compete with the likes of Amazon, Jet and other e-commerce retailers.

Not only do many people in the industry consider this tax on inventory unfair it has a negative impact on profits at a time when in-store sales are in decline due to fierce competition from e-commerce businesses.

It would certainly behoove state leaders to work with in-state retailers not only to help them compete but also allow them the financial flexibility to provide jobs and, as importantly, pay taxes.

Where the resistance will come from in eliminating this inventory tax will be from the state’s school districts which would be face a $50 million hit if the exemption is approved. But, according to Education Commissioner Johnny Key anything that changes at the local level with respect o funding, the state would be responsible for making up the loss based on state law.

One other area this task force committee is looking seriously at is changing state law to assist school districts that have property owners appealing certain property tax assessments and bills.