The proposed bill seeks to repeal the sales and use tax on food and food ingredients in Arkansas, thereby exempting these items from taxation. It includes the deletion of various sections of the Arkansas Code that previously outlined tax rates and conditions for food items. The bill introduces new language that explicitly states that gross receipts or gross proceeds from the sale of food and food ingredients are exempt from both the gross receipts tax and the compensating use tax. Additionally, it makes conforming amendments to ensure that the tax structure for food items is simplified, potentially lowering costs for consumers.

Moreover, the bill modifies the excise tax structure for tangible personal property, specified digital products, digital codes, and taxable services, establishing a tax rate of 0.5% while excluding food and food ingredients, as well as used motor vehicles, trailers, and semitrailers. It also introduces additional excise taxes of 0.5% and 0.875% on the same categories, maintaining existing collection and reporting procedures. The repeal of Arkansas Code 26-53-145 removes the Secretary of the Department of Finance and Administration's authority to set tax rates on food based on federal law and revenue needs. The changes will take effect on the first day of the calendar quarter following the act's effective date.

Statutes affected:
HB 1661: 19-5-1103(b), 19-5-1227(b), 19-6-201(58), 19-6-201(60), 26-52-301, 26-52-302, 26-52-317, 26-52-324, 26-52-103, 6-62-701, 6-62-1101, 15-20-1301, 26-52-323, 26-53-102, 26-52-101, 26-53-101, 25-15-201, 26-18-201, 26-18-202, 26-18-208, 26-18-209, 26-52-512, 26-53-125, 26-53-145, 26-53-106, 26-53-107, 26-53-106(a)