Bill Summary – FastDemocracy

Stricken language would be deleted from and underlined language would be added to present law.
                                           Act 915 of the Regular Session
 State of Arkansas
 93rd General Assembly                        A Bill
 Regular Session, 2021                                                               SENATE BILL 26
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 By: Senator J. Sturch
 By: Representative S. Smith
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                                   For An Act To Be Entitled
                 AN ACT TO AMEND THE LAW CONCERNING THE REDUCED SALES
                 AND USE TAX RATE FOR UTILITIES USED BY MANUFACTURERS;
                 TO APPLY A REDUCED SALES AND USE TAX RATE TO SALES OF
                 COAL FOR USE IN MANUFACTURING; AND FOR OTHER
                 PURPOSES.
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                                               Subtitle
                         TO AMEND THE LAW CONCERNING THE REDUCED
                         SALES AND USE TAX RATE FOR UTILITIES USED
                         BY MANUFACTURERS; AND TO APPLY A REDUCED
                         SALES AND USE TAX RATE TO SALES OF COAL
                         FOR USE IN MANUFACTURING.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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         SECTION 1.      Arkansas Code  26-52-319 is amended to read as follows:
         26-52-319.      Natural gas, and electricity, and coal used by
 manufacturers  Definition.
         (a)(1)(A)       Beginning July 1, 2014, in lieu of the gross receipts or
 gross proceeds tax levied in  26-52-301 and 26-52-302, there is levied an
 excise tax on the gross receipts or gross proceeds derived from the sale of
 natural gas and electricity to a manufacturer for use directly in the actual
 manufacturing process at the rate of one percent (1%).
                         (B)(i)    Beginning July 1, 2015, the The gross receipts or
 gross proceeds tax levied in  26-52-301 and 26-52-302 and this section
 shall be levied at a rate of zero percent (0%) on the sale of natural gas,
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 and electricity, and coal to a manufacturer for use directly in the actual
 manufacturing process.
                            (ii)(B)   However, the sale of natural gas, and
 electricity, and coal to a manufacturer for use directly in the actual
 manufacturing process shall remain subject to the excise tax of one-eighth of
 one percent (1/8 of 1%) levied in Arkansas Constitution, Amendment 75, and
 the temporary excise tax of one-half percent (%) levied in Arkansas
 Constitution, Amendment 91, and the excise tax of one-half percent (%)
 levied in Arkansas Constitution, Amendment 101.
            (2)    The taxes levied in this subsection shall be distributed as
 follows:
                     (A)   Seventy-six and six-tenths percent (76.6%) of the tax,
 interest, penalties, and costs received by the Secretary of the Department of
 Finance and Administration shall be deposited as general revenues;
                     (B)   Eight and five-tenths percent (8.5%) of the tax,
 interest, penalties, and costs received by the secretary shall be deposited
 into the Property Tax Relief Trust Fund; and
                     (C)   Fourteen and nine-tenths percent (14.9%) of the tax,
 interest, penalties, and costs received by the secretary shall be deposited
 into the Educational Adequacy Fund.
            (3)(A)     The excise tax levied in this section applies only to
 natural gas, and electricity, and coal sold for use directly in the actual
 manufacturing process.
                     (B)   Natural gas, and electricity, and coal sold for any
 other purpose are subject to the full gross receipts or gross proceeds tax
 levied under  26-52-301 and 26-52-302.
            (4)    The excise tax levied in this section shall be collected,
 reported, and paid in the same manner and at the same time as is prescribed
 by law for the collection, reporting, and payment of all other Arkansas gross
 receipts taxes.
      (b)   As used in this section, manufacturer means a:
            (1)    Manufacturer classified within sectors 31 through 33 31-33
 or sector code 115111 of the North American Industry Classification System,
 as in effect on January 1, 2011; or
            (2)    Generator of electric power classified within sector 22 of
 the North American Industry Classification System, as in effect on January 1,
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 2011, that uses natural gas to operate a new or existing generating facility
 that uses combined-cycle gas turbine technology.
      (c)(1)     Except as otherwise provided in this subsection, the tax rate
 under subsection (a) of this section does not apply to a manufacturer as
 defined in subdivision (b)(2) of this section.
               (2)   In lieu of the tax rate under subsection (a) of this
 section, the excise tax rate levied on the gross receipts or gross proceeds
 derived from the sale of natural gas and electricity to a manufacturer as
 defined in subdivision (b)(2) of this section to operate a new or existing
 facility that uses combined-cycle gas turbine technology is as follows:
                     (A)   Beginning January 1, 2012, five and one-eighth percent
 (5.125%);
                     (B)   Beginning January 1, 2013, four and one-eighth percent
 (4.125%);
                     (C)   Beginning January 1, 2014, two and five-eighths
 percent (2.625%); and
                     (D)   Beginning January 1, 2015, one percent (1%).
               (3)   The taxes levied in this subsection shall be distributed in
 the same manner as stated in subsection (a) of this section.
      (d)    Natural gas and electricity subject to the reduced tax rate levied
 in this section shall be separately metered from natural gas and electricity
 used for any other purpose by the manufacturer or otherwise established under
 subsection (f) of this section.
      (e)    Before the sale of natural gas, or electricity, or coal at the
 reduced excise tax rate levied in this section, the secretary may require any
 a seller of natural gas, or electricity, or coal to obtain a certificate from
 the consumer, in the form prescribed by the secretary, certifying that the
 manufacturer is eligible to purchase natural gas, and electricity, and coal
 at the reduced excise tax rate.
      (f)    The secretary shall promulgate rules for the proper administration
 of this section.
      (g)    The gross receipts or gross proceeds derived from the sale of
 natural gas, and electricity, and coal to a manufacturer shall continue to be
 subject to:
               (1)   The excise tax taxes levied under the Arkansas Constitution,
 Amendment 75,  2; and
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            (2)    All municipal and county gross receipts taxes.
      (h)   All existing exemptions from the gross receipts tax levied by this
 chapter and the compensating use tax levied by the Arkansas Compensating Tax
 Act of 1949,  26-53-101 et seq., for natural gas, or electricity, and coal
 used in manufacturing or for other purposes that are otherwise provided by
 law shall continue in effect.
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      SECTION 2.    Arkansas Code  26-53-148 is amended to read as follows:
      26-53-148.    Natural gas, and electricity, and coal used by
 manufacturers  Definition.
      (a)(1)(A)    Beginning July 1, 2014, in lieu of the tax levied in  26-
 53-106 and 26-53-107, there is levied an excise tax on the sales price of
 natural gas and electricity purchased by a manufacturer for use directly in
 the actual manufacturing process at the rate of one percent (1%).
                   (B)(i)     Beginning July 1, 2015, the The compensating use
 tax levied in  26-53-106 and 26-53-107 and this section shall be levied at
 a rate of zero percent (0%) on natural gas, and electricity, and coal
 purchased by a manufacturer for use directly in the actual manufacturing
 process.
                            (ii)(B)   However, natural gas, and electricity, and
 coal purchased by a manufacturer for use directly in the actual manufacturing
 process shall remain subject to the excise tax of one-eighth of one percent
 (1/8 of 1%) levied in Arkansas Constitution, Amendment 75, and the temporary
 excise tax of one-half percent (%) levied in Arkansas Constitution,
 Amendment 91, and the excise tax of one-half percent (%) levied in Arkansas
 Constitution, Amendment 101.
            (2)    The taxes levied in this subsection shall be distributed as
 follows:
                   (A)   Seventy-six and six-tenths percent (76.6%) of the tax,
 interest, penalties, and costs received by the Secretary of the Department of
 Finance and Administration shall be deposited as general revenues;
                   (B)   Eight and five-tenths percent (8.5%) of the tax,
 interest, penalties, and costs received by the secretary shall be deposited
 into the Property Tax Relief Trust Fund; and
                   (C)   Fourteen and nine-tenths percent (14.9%) of the tax,
 interest, penalties, and costs received by the secretary shall be deposited
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 into the Educational Adequacy Fund.
               (3)(A)     The excise tax levied in this section applies only to
 natural gas, and electricity, and coal purchased for use directly in the
 actual manufacturing process.
                        (B)   Natural gas, and electricity, and coal purchased for
 any other purpose shall be subject to the full compensating use tax levied
 under  26-53-106 and 26-53-107.
               (4)   The excise tax levied in this section shall be collected,
 reported, and paid in the same manner and at the same time as is prescribed
 by law for the collection, reporting, and payment of all other Arkansas
 compensating use taxes.
      (b)    As used in this section, manufacturer means a:
               (1)   Manufacturer classified within sectors 31 through 33 31-33
 or subsector code 115111 of the North American Industry Classification
 System, as in effect on January 1, 2011; or
               (2)   Generator of electric power classified within sector 22 of
 the North American Industry Classification System, as in effect on January 1,
 2011, that uses natural gas to operate a new or existing generating facility
 that uses combined-cycle gas turbine technology.
      (c)(1)     Except as otherwise provided in this subsection, the tax rate
 under subsection (a) of this section does not apply to a manufacturer as
 defined in subdivision (b)(2) of this section.
               (2)   In lieu of the tax rate under subsection (a) of this
 section, the excise tax rate levied on the sales price of natural gas and
 electricity purchased by a manufacturer as defined in subdivision (b)(2) of
 this section to operate a new or existing facility that uses combined-cycle
 gas turbine technology is as follows:
                        (A)   Beginning January 1, 2012, five and one-eighth percent
 (5.125%);
                        (B)   Beginning January 1, 2013, four and one-eighth percent
 (4.125%);
                        (C)   Beginning January 1, 2014, two and five-eighths
 percent (2.625%); and
                        (D)   Beginning January 1, 2015, one percent (1%).
               (3)   The taxes levied in this subsection shall be distributed in
 the same manner as stated in subsection (a) of this section.
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        (d)   Natural gas and electricity subject to the reduced tax rate levied
 in this section shall be separately metered from natural gas and electricity
 used for any other purpose by the manufacturer or otherwise established under
 subsection (f) of this section.
        (e)   Before purchasing any natural gas, or electricity, or coal at the
 reduced excise tax rate levied in this section, the secretary may require any
 seller of natural gas, or electricity, or coal to obtain a certificate from
 the consumer, in the form prescribed by the secretary, certifying that the
 manufacturer is eligible to purchase natural gas, and electricity, and coal
 at the reduced excise tax rate.
        (f)   The secretary shall promulgate rules for the proper administration
 of this section.
        (g)   The purchase of natural gas, and electricity, and coal by a
 manufacturer shall continue to be subject to:
              (1)    The excise tax taxes levied under the Arkansas Constitution,
 Amendment 75,  2; and
              (2)    All municipal and county compensating use taxes.
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        SECTION 3.    EFFECTIVE DATE.   Sections 1 and 2 of this act are effective
 on the first day of the calendar quarter following the effective date of this
 act.
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                                  APPROVED: 4/26/21
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