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Permanent 0.5% Sales Tax on Ballot

By Caleb Taylor

Should Arkansas approve a permanent 0.5 percent sales tax for road funding in November?

UCA Assistant Professor of Economics and ACRE Scholar Dr. Jeremy Horpedahl gave voters a few important points to consider in “Paying for roads,” in the Arkansas Democrat-Gazette on September 25.

The 0.5 percent sales tax on the ballot is currently scheduled to expire soon, once it raises enough revenue to retire the $1.3 billion on bonds issued (probably in 2023) if a permanent extension isn’t passed by voters. Horpedahl notes that Arkansas already has the second-highest state-and-local sales tax rate in the nation behind Tennessee (which has no state income tax on wages and salaries). 

Horpedahl also notes that Arkansas already spends more than most states on road funding.

Horpedahl writes:

Do we spend enough on roads? Arkansas has the 15th highest spending on roads per capita, or the 11th highest spending as a percentage of personal income in the state, according to the most recent data from the Census Bureau’s Annual Survey of State and Local Government FinancesEven if we look at 2012 data, before the temporary sales tax to fund roads was put in place, Arkansas had the 22nd highest spending on roads as a percentage of personal income, and was above the national average.”

Horpedahl mentions raising the gas tax, toll roads, and reducing state government spending as alternatives to raising the sales tax.

Horpedahl writes:

This November, voters must decide whether they want to make the sales tax increase permanent or not. These other funding methods aren’t on the ballot right now, but they are real options the Legislature could take up in the next session. The current sales tax for roads doesn’t expire for a few more years. There’s plenty of time for our elected representatives to go back and find better ways to keep Arkansas moving.”

For a different perspective from a fellow UCA College of Business professor, check out “Vote for Issue 1,” by UCA Professor of Logistics and Supply Chain Management Dr. Doug Voss published in the Arkansas Democrat-Gazette on September 26.

You can find more of our research on taxes and spending here.