Machinery-repair tax bill advances

The Senate advanced legislation on Monday that would phase out the InvestArk tax- credit program in exchange for providing a sales-tax exemption for manufacturers on purchases related to repairing machinery and equipment.

The Senate voted 33-1 for Senate Bill 362 by Sen. Lance Eads, R-Springdale. The bill would sunset the InvestArk program on July 1 with no new applicants for the tax credits being accepted, the Finance and Administration Department said.

Under current state law, manufacturers’ purchases of repair, replacement and modification parts and services for existing machinery and equipment are eligible for a tax refund of 1 percentage point of Arkansas’ 6.5 percent sales and use tax. The bill would reduce the net tax rate to 4.5 percent, effective July 1, 2018; then 1 percentage point a year until it reaches 1.5 percent in 2021. The rate would then drop to zero, effective July 1, 2022, according to the finance department.