Economists Say Tax Repeal Good for System

September 8, 2002
Posted at: 4:15 p.m. CDT


LITTLE ROCK, Ark. -- At first glance, state economists say, a proposal to repeal the state sales tax on food looks like a good one to make the state's tax system more equitable.

However, they say repealing the tax actually could amount to a loss for the state, a gain for grocers, and more of a burden for poor Arkansans.

The Committee to Axe the Food Tax submitted voter signatures to the secretary of state's office for certification to get on the November Fifth ballot. The proposal would repeal the state sales tax on groceries and medicine.

Richard Wilson, an economist for the Bureau of Legislative Research, says he doubts the money cut from state sales tax revenues by repealing the tax would flow back to consumers. He says consumers have already demonstrated a willingness to pay a certain amount for groceries. And if the tax is removed, that leaves a vacuum that grocers could fill by raising prices. Also, he says, food stamp recipients face the likelihood of paying more taxes if the state raises other taxes to make up for the lost food tax revenue.

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