HB1464
To Create A Sales And Use Tax Exemption For Parts For And Repair Of Agricultural Equipment And Machinery.
AI-Generated Summary
This bill proposes to create a sales and use tax exemption for parts and repair services for agricultural equipment and machinery in Arkansas. It defines "agricultural equipment and machinery" to include implements used exclusively and directly in farming, such as irrigation pipe and aviation machinery, but excludes timber production equipment, registered motor vehicles, and hand tools. "Farming" is defined as the business of agricultural production of food, fiber, grass sod, or nursery products. The exemption would apply to parts purchased for the modification, replacement, or repair of existing agricultural equipment and machinery. It would also cover services related to the installation, alteration, addition, cleaning, refinishing, replacement, or repair of such equipment. The intent is to reduce the cost of maintaining and operating farming equipment. The exemption would become effective on the first day of the calendar quarter following the act's enactment. This aims to support agricultural operations within the state by lowering operational expenses.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries of this bill would be farmers and agricultural producers in Arkansas. By exempting the purchase of parts and repair services for their equipment and machinery from sales and use taxes, their operational costs would be reduced. This could lead to increased profitability or allow for reinvestment in their businesses. Businesses that sell parts for agricultural equipment and machinery, as well as those that provide repair and maintenance services to the agricultural sector, would also likely see increased demand and sales.
Who Might Suffer?
The primary entities that would be negatively impacted by this bill are the state and local governments of Arkansas. The exemption from sales and use taxes would result in a reduction of tax revenue that would otherwise be collected. This decrease in revenue could potentially affect the funding available for public services and programs, depending on the overall fiscal impact of the exemption. While not directly negatively impacted, consumers who do not engage in farming would continue to pay sales tax on similar goods and services, potentially creating a disparity in tax burden for different sectors.