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story.lead_photo.caption Governor Asa Hutchinson (left) talks about shrinking Medicare costs on Thursday, Jan. 4, 2018, at the State Capitol in Little Rock. - Photo by Thomas Metthe

FORT SMITH -- Gov. Asa Hutchinson said he doesn't plan to call a special session to consider legislation for collecting sales taxes on online purchases, saying there is no consensus on the matter in the state Legislature.

In last year's legislative session, lawmakers considered and rejected proposals that would have required collecting such sales taxes.

Speaking Friday at the winter conference of the Arkansas Municipal League, Hutchinson said he has received resolutions from city councils across the state encouraging legislation to better level the playing field between online merchants and communities' brick-and-mortar stores.

The online taxes would not produce as much revenue for the state as some expect, Hutchinson said Friday. State Sen. Jim Hendren, R-Gravette, said he was "underwhelmed" by the amount of money online sales taxes have generated.

But money isn't the primary motivation for seeking to collect sales taxes on online purchases, Hutchinson said.

"The motivation is fairness in our tax system that will create an equal playing field for all our merchants, whether they are online or otherwise," he said.

The U.S. Supreme Court said Friday that it will revisit a 26-year-old ruling that made much of the Internet a tax-free zone. Heeding calls from traditional retailers and dozens of states, justices said they will hear South Dakota's contention that the 1992 ruling is obsolete in the e-commerce era and should be overturned.

State and local governments could have collected up to $13 billion more in 2017 if they had been allowed to require sales tax payments from online merchants and other remote sellers, according to a report from the Government Accountability Office, Congress' nonpartisan audit and research agency. Other estimates are even higher.

All but five states impose such sales taxes.

Online retailers Wayfair Inc., Inc. and Newegg Inc. are opposing South Dakota in the court fight. Each collects sales taxes from customers in only some states.

The case also will affect Inc., the biggest online retailer, although isn't directly involved in it. When selling its own inventory, Amazon charges sales taxes in every state that imposes one, but about half of its sales involve goods owned by third-party merchants. The company says it's up to the sellers to collect any taxes on those items, and many don't.

The court is expected to hear arguments in April with a ruling by late June.

State Rep. Doug House, R-North Little Rock, said Friday during a discussion at the conference that he voted against the online sales taxes bill last year because of legal questions regarding such collections.

House said that if Arkansas began collecting the taxes and the Supreme Court declared the practice unconstitutional, it would be difficult to recover all of the tax money distributed to entities and send it back to the affected retailers.

If the high court rules that collecting such taxes is constitutional, House said, he would support calling a special session to consider legislation to collect online sales taxes in Arkansas.

Hendren said he voted last year in favor of collecting the taxes because he did not want to see citizens carry a tax burden that could be eased if online retailers paid sales taxes.

Among other topics addressed Friday, Hutchinson said he believes the state will benefit from requiring that able-bodied adults work, participate in job training and job searches, or do volunteer work in order to receive Medicaid benefits.

"It's important for you to understand that this is not designed as punitive," he said. "It is simply designed to move people from welfare recipient and the safety net on to work when they are able-bodied and able to do it."

Currently, he said, Arkansas' work requirement is a referral to Work Force Services for training. Only the referral is mandatory. If the person doesn't show up, he won't lose Medicaid benefits.

Under the work requirement, able-bodied people who lack jobs skills will get the training, and those who can't find work will get job search assistance, Hutchinson said.

"I think this will be good for Arkansas," he said. "It will be good helping to move people to work."

Hutchinson also said he has asked Arkansas Public Service Commission Chairman Ted Thomas to expedite a review of the rates that utility customers pay.

The governor said he expects utilities to see reductions in their corporate taxes resulting from the federal tax overhaul that President Donald Trump recently signed.

Since the corporate tax rate is part of the cost of doing business that utilities pass on to ratepayers, Hutchinson said, a reduction in corporate taxes should result in a reduction in rates utility customers pay.

"The utilities are going to have their corporate taxes reduced, and that's going to be a benefit to ratepayers," Hutchinson said.

Information for this article was contributed by Greg Stohr of Bloomberg News.

State Desk on 01/13/2018

Print Headline: Governor: No Net-sales-tax session on tap

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