Pike County says yes to Hospital Sales Tax
Tis the season for sales taxes. Here is a story in the Nashville News regarding the passage of a three-eighth's cent sales tax for the Pike County Hospital. The sales tax will not expand the facility. It will simply go toward the general operation of the cash-strapped facility. This will put Pike County's sales tax rate somewhere over 2%.
This would be as good a place as any to vent my frustration with Arkansas' tax laws. In the last few hours, I've run across three sales tax proposals. The one listed above--which passed--and two others that were dashed. Why, might you ask, does every local government's answer to every problem vexing their city or county involve a sales tax? Well, that's because the sales tax is the only real option that local governments have for generating revenue.
I'm afraid that many areas of the state may have stretched their sales tax rates to the outer-limits of sanity. For example, there are sixteen counties with sales tax rates over 2%. The State sales and use tax rate is 6%. Local sales taxes vary in range from 0% to 3.5%.
What you may not realize is that Arkansas' highest sales tax rates are in our most poverty stricken areas. Dumas and Dewitt weigh in with the highest rates. When you factor their 3.5% rates with their county's 2% rate and the state's 6% rate, they tax their citizens at 11.5%. Other counties with 2% tax rates include, Phillips, Mississippi, St. Francis, Sevier (at 2.375%), Chicot, Cross. Let's contrast these counties with our state's more affluent counties. Pulaski County's sales tax rate is 1%. Washington County's rate is 1.25%. Benton County weighs in at 1%. It is our poorest counties that tax themselves at the highest rates. This is because they have the most pressing problems to address. But as they reach the outer-limit of sales tax sanity, they will have no way to address the needs of their citizens. The property in these areas does not generate enough revenue to make a significant difference. That's because these areas are depressed. The problem is cyclical.
In short, our state is in danger of maxing out its sales tax rate. I cannot imagine any city taxing itself beyond 10% much less 11.5%. The poorest areas of our state have already gone too many times to the sales tax well. They may find that their only well has gone dry.
This would be as good a place as any to vent my frustration with Arkansas' tax laws. In the last few hours, I've run across three sales tax proposals. The one listed above--which passed--and two others that were dashed. Why, might you ask, does every local government's answer to every problem vexing their city or county involve a sales tax? Well, that's because the sales tax is the only real option that local governments have for generating revenue.
I'm afraid that many areas of the state may have stretched their sales tax rates to the outer-limits of sanity. For example, there are sixteen counties with sales tax rates over 2%. The State sales and use tax rate is 6%. Local sales taxes vary in range from 0% to 3.5%.
What you may not realize is that Arkansas' highest sales tax rates are in our most poverty stricken areas. Dumas and Dewitt weigh in with the highest rates. When you factor their 3.5% rates with their county's 2% rate and the state's 6% rate, they tax their citizens at 11.5%. Other counties with 2% tax rates include, Phillips, Mississippi, St. Francis, Sevier (at 2.375%), Chicot, Cross. Let's contrast these counties with our state's more affluent counties. Pulaski County's sales tax rate is 1%. Washington County's rate is 1.25%. Benton County weighs in at 1%. It is our poorest counties that tax themselves at the highest rates. This is because they have the most pressing problems to address. But as they reach the outer-limit of sales tax sanity, they will have no way to address the needs of their citizens. The property in these areas does not generate enough revenue to make a significant difference. That's because these areas are depressed. The problem is cyclical.
In short, our state is in danger of maxing out its sales tax rate. I cannot imagine any city taxing itself beyond 10% much less 11.5%. The poorest areas of our state have already gone too many times to the sales tax well. They may find that their only well has gone dry.
