As many of you may have heard by now, Arkansas Governor Asa Hutchinson signed SB 336 into law on Monday (May 3) this week. The new law establishes a sales and use tax exemption on the sales of precious metals bullion, coins and currency in that state, which takes effect on October 1, 2021.
That will make Arkansas the 39th state with no state sales tax at all (Alaska, Delaware, Montana, New Hampshire and Oregon) or a complete or partial sales tax exemptions on such items. Similar efforts introduced this year in the legislatures of Hawaii, Maine, Mississippi, New Jersey and Tennessee have stalled thus far. In some of these states, existing progress stopped after the Biden Administration ordered that, because of the extra federal funding in recent legislation, no state government could use such funding to cut its own tax burden on taxpayers. In Ohio, an exemption may yet be re-established during the budget process.
The main reason that there have been so many successful campaigns for sales and use tax exemptions on precious metals bullion, coins and currency in recent years is that they are attractive to state governments as no-cost business development programs.
Once states have adopted such exemptions, activity has increased at in-state dealerships to such a degree that 1) employment soared (it more than doubled in Michigan after adoption of its exemption), 2) coin dealers sold much more of other kinds of inventory on which sales taxes were collected (jewelry, antiques, other collectibles, hobby supplies and the like), and 3) a greater number of out-of-state dealers and customers flocked to in-state coin shows, resulting in higher sales by the hospitality industry and other retailers. In many states, such as Michigan, the state government experienced a net increase in sales tax collections (higher payrolls mean more expenditures on goods on which such taxes are collected) along with greater individual and business income and other taxes.
The state governments whose coffers have benefitted the most from adopting such exemptions are those who have the most wide-ranging exemptions. The handful of states that only have exemptions on precious metals bullion or bullion-priced coins do not spark as great an increase in business volume for dealers, nor increases in coin show attendance.
There were many sales tax exemption efforts in years past (including one in Arkansas) that failed because those advocating for their adoption did not have the information on the business development benefits to state governments. After the National Coin & Bullion Association (NCBA), the new trade name for the Industry Council for Tangible Assets, conducted a 2016 dealer survey to confirm that exemptions increased in-state business activity and tax collections, there were several states that enacted such exemptions.
To spur even more states to adopt sales and use tax exemptions for precious metals bullion, coins and currency in the future, the NCBA is preparing to conduct an updated dealer survey. When this comes out, greater dealer response will improve the validity of the results and carry even more weight with government bureaucrats and legislators. If you are a dealer, keep an eye out for this survey in about a month, then please respond.
By the way, the more states that have such sales tax exemptions, the safer are existing state exemptions. Several state legislatures had bills introduced this year that could result in the revocation of existing exemptions. Fortunately, so far, none have been enacted. Protection of existing exemptions is just one more reason why every coin dealer can help by responding to the forthcoming NCBA dealer survey.
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2020), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).