Posted 10/24/2013 04:13 pm
Updated 6 months ago
LITTLE ROCK - Democratic gubernatorial hopeful Mike Ross on Thursday called for the gradual reduction in the tax that Arkansas manufacturers pay for repairing or partly replacing machinery, calling it a cut that would reward long-time businesses in the state.
The former congressman proposed phasing out nearly all of the tax over time and said the law unfairly punishes manufacturers already in the state. Ross estimates that eliminating the tax would eventually cost Arkansas about $40 million a year.
"I'm absolutely convinced it will create jobs in this state," Ross told The Associated Press in a phone interview before unveiling the proposal during a speech in Arkadelphia. "It will encourage plants that are already here to modernize and expand."
The tax on the replacement parts and repairs is 6.5 percent, but lawmakers earlier this year approved legislation that would effectively cut that rate to 5.5 percent starting July 2014. Ross' proposal would not affect the parts of the tax that are constitutionally required under measures voters have approved to support highways and state conservation efforts.
Ross called for the proposal to be phased out as the state can afford the loss in revenue, comparing it to Gov. Mike Beebe's efforts to reduce the state's sales tax on groceries. Beebe, a Democrat who was first elected in 2006, has successfully pushed for cutting the grocery tax from 6 percent to 1.5 percent since taking office.
"Much like we are phasing out the sales tax on groceries, I think we need to phase out this tax that's putting us as an uncompetitive advantage with other states," Ross said.
Ross is the only announced Democratic candidate for governor. Former U.S. Rep. Asa Hutchinson, Little Rock businessman Curtis Coleman and state Rep. Debra Hobbs are seeking the Republican nomination. Beebe is term limited and unable to seek re-election next year.
Hutchinson earlier this year called for gradually reducing the state individual income tax in a similar manner. Ross had criticized Hutchinson's tax cut proposal, saying Hutchinson wasn't providing enough details on how he'd pay for the loss in revenue.
Ross said he's also planning to unveil other tax cut proposals during his campaign, saying he wants to reform income taxes in a way that benefits working families and helps create jobs.
Hutchinson, who won the GOP gubernatorial nomination in 2006 but lost to Beebe, called Ross' tax cut proposal too narrow and said it wouldn't benefit as many people as his call for individual income tax cuts. Hutchinson said he believed his tax cut plan would benefit many other industries, not just manufacturers.
"There's a huge distinction on the path we have chosen for job creation," Hutchinson said.