BY MELANIE WADE –
Mena City Council passed Resolution 1339 on Tuesday, July 11, 2017 at their regular monthly meeting. The resolution supports proposed federal and state legislation to insure the proper assessment and collection of sales tax from all internet and online sales, no matter where that business is located. The Arkansas Municipal League asked each city in the state to pass a similar resolution and to send it to Arkansas Governor Asa Hutchinson to encourage him to call a special session for legislators to vote on the matter.
A piece of legislation was sent through the Arkansas legislature this spring, dubbed SB 140. That bill was shot down in the House.
Mena Mayor George McKee, along with many other municipalities, feel that internet sales have decreased local collections, causing decreasing budgets across the country. As consumers make more and more online purchases, cities and counties take deeper cuts. “Our revenue is dropping; this will help,” he said. Mayor McKee gave an example of how this could affect a community. “Waldron has lost their Walmart, and along with that, the sales tax from that business. With a law like this, Waldron residents could order online from Walmart and the city will still be able to gain the sales tax from the purchase.”
In October of 2016, The Pulse spoke with Polk County Judge Brandon Ellison about the effect internet sales have had on county tax collections. Currently, the county is $13,740.62, behind in sales tax collections from this same time last year. At the time, Ellison speculated that internet sales could be a contributing factor on the decline of collections. He stated, “We encourage people to spend money at home. Internet sales are not taxed. It has certainly taken off and people buy a lot of stuff online and it’s really unfair to brick and mortar businesses at the local level. They’ve taken the risk and made the investment and they are having to collect state, county, and local taxes while the internet sales don’t. I think it is probably affecting more rural Arkansas counties also.”
Just months later, legislators would consider this very factor. Amazon.com is ahead of the game when it comes to the concept. The large online retailer made it their own policy to begin collecting local and state sales taxes. Mena received their first payment from Amazon in May. Although it is not yet a significant number, legislation could increase it drastically.