A proposal to make a new round of tax cuts in Arkansas will rely on hikes on cigarette and vaping taxes to keep the budget balanced according to its bipartisan group of sponsors.
“Today we are going to be filing a bill to bring approximately 100-million dollars in tax relief to low and middle income families,” said State Sen. Jim Hendren, the Republican majority leader on the proposal. “These…changes will focus 84 percent of the tax relief on the bottom 80 percent of the taxpayers in Arkansas.”
The announcement comes a few weeks after the legislature approved a tax cut on mostly upper incomes put forward by Republican Gov. Asa Hutchinson. Senate Bill 571 is a three-pronged plan creating an earned income tax credit, a state version of the popular tax tool available on many federal returns. To make the numbers work, the plan takes a swing at tobacco with a 20 percent excise tax on cigarettes and e-cigarettes, a key provision pushed by health experts.
“This aligns policy and incentives financially to encourage people to lead a healthier and productive life,” said Dr. Joe Thompson, the former state surgeon general.
Hendren is confident he’s got enough support to get the bill through the senate, but it will face more challenges in the House, where he says the tobacco lobby can flex its muscle and where Speaker Matthew Shepherd (R – El Dorado) has yet to signal his support.
“They can be powerful,” the majority leader said. “I've been down here long enough to know they are a force.”
Hendren and his co-sponsors hope that the rare sight of Republicans and Democrats working together give the bill momentum.
“This is a bipartisan bill,” said state sen. Linda Chesterfield (D – Little Rock). “It is important that we remember the most important thing is to work together.”
Government accountants still need to make their calculations on the costs and cuts in the bill. Hendren expects it to go before the senate revenue and tax committee next week. He said he has discussed the proposal with his cousin the governor, but wouldn’t speak for him at Thursday’s news conference. He didn’t expect him to oppose the bill.