2019 Session: Arkansas House green lights discount for certain used car customers

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LITTLE ROCK, Ark. – When shopping for a used car, the price on the window isn’t a buyer’s bottom line. 

The vehicle also comes with a sales tax. However, some Arkansans in the market may not have to pay it for long. 

“It just puts a lot of stress on them,” said Michael Wyatt, a Little Rock used car salesman. “It plays a huge role in the decision to buy a car. You see people both prepared for it and not prepared for it.” 

Under current state law, Wyatt’s customers who spend less than $4,000 on a used car don’t have to pay state and local sales tax. The Arkansas House advanced a bipartisan bill Wednesday that would raise that exemption to $7,500.

“It’s a big market of people who buy that price of car,” Wyatt said. “It’s a huge market. We sell that price car really quickly.”

The bill’s sponsor, St. Rep. John Payton, R-Wilburn, is a car dealer himself. While speaking for it on the House floor, Payton told his colleagues he has a specific customer in mind.

“This is so important for struggling families,” he said. “I don’t know how to express it.” 

The Arkansas Department of Finance and Administration (DFA) estimates the bill to make nearly 40,000 used vehicles no longer subject to the tax. However, the agency testified against it, noting the discount comes to a $12.6 million pricetag for the state.

According to DFA’s fiscal impact on the legislation, increasing the used car sales tax exemption to $7,500 would mean $14.2 million in revenue loss. The bill would make some of that up, $1.6 million, by making all new trailers subject to state and local sales tax. Under current state law, trailers that cost less than $4,000 are exempt.

“If we want to support the people of Arkansas, we’ll support this bill,” St. Rep. Fred Love, D-Little Rock, said on the House floor. 

No lawmaker spoke against the legislation Wednesday.

Wyatt hopes it not only helps drivers stop at used car lots but also splurge.

“Some people are going to be able to buy a better car than they normally wouldn’t buy,” he said.

The legislation passed the House 84 to 1, with nearly every member signed on as a cosponsor. It now moves to a Senate committee, where Rep. Payton indicated it may have a tougher time advancing. 

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