Print Page   |   Contact Us   |   Your Cart   |   Report Abuse   |   Sign In
News & Press: Arizona Business News Updates

Municipalities turning out to be not-so-business-friendly

Friday, May 10, 2013   (0 Comments)
Posted by: Rhette Baughman
Share |

Perhaps one of the most important and contentious business issues to face the Arizona Legislature in many years is sales tax simplification. Up until recently, Arizona’s complicated sales tax system flew under the radar while other issues took center stage at the Legislature. I am sure you are now well aware that Arizona has arguably one of the most complicated tax systems in the U.S. as much has been written about it.

Arizona is one of only four states that doesn’t have a uniform tax policy system that allows one point of contact and one point of audit for small businesses to pay the tax.

Fortunately, the time has finally arrived to fix a broken system that should have never gotten to be as bad as it is today. The Transaction Privilege Tax Simplification Task Force aimed to clear up the confusion and had drawn up 10 proposals for overhauling Arizona’s sales tax system. Only three of the 10 proposed changes require legislative action, but those three are now being opposed by many Arizona cities who promote themselves as being friendly toward business.

The tax overhaul is necessary to not only create a better economic development climate, but to also allow Arizona to take advantage of federal legislation to collect remote sales taxes from online transactions. This has been estimated to be in the hundreds of millions of dollars.

The bill includes a proposal to have the Arizona Department of Revenue collect sales taxes for all cities in Arizona, including 18 that currently collect their own transaction privilege taxes, and it would eliminate cities’ abilities to conduct their own transaction privilege tax audits of businesses. That function would also shift to the Department of Revenue.

Currently, a company that conducts business in multiple cities in the state is required to determine the tax rate, fill out the paperwork and pay the taxes for each municipality. For service related businesses, filling out the paperwork for the privilege to pay taxes has become a huge burden and a large part of monthly overhead. Some are remitting taxes to several jurisdictions every month.

For a state that proclaims that it is pro-small business, this is an odd way of showing it.

But cities have been worried about the measure’s impact on their finances. Currently, tax revenues are split with the municipalities where construction activity is taking place. Meanwhile, we have witnessed Arizona mayors delivering a single message to the legislature: We want our money! For them it’s not about easing the burden on their local businesses or running a more efficient city government. It has simply been about protecting what money they have.

The governor’s proposal has since been amended to allow municipalities to continue to tax construction activity while the tax on materials would be collected at stores wherever construction materials are purchased. So in theory, a subcontractor will pay the full retail tax on the materials at the store where they’ve been purchased, just as it happens with everybody else. The cost of the labor would then be rolled into the final and total cost of the construction, which would be subject to municipal taxation, which helps keep the municipalties’ revenue neutral.

While this compromise was expected to alleviate the cities’ concerns on lost revenues, municipalities smelled blood in the water and now want more. They say they want to have the authority for audits within their jurisdictions rather than turn over all audit authority to the state. It turns out municipalities are worried they might have to lay off their audit staffs so they’re advocating to keep that authority.

Unfortunately, this Legislative session has proven municipalities are not at all about tax simplification. They continue to hold their hand out for taxing hard-working small businesses generate.

Not all municipalities are joining this effort; Phoenix, for example, is not aggressively pursuing changes. But officials in Tucson, Oro Valley and Marana are doing nothing to distance themselves from the effort.

I encourage you make your own decision as to whether leaders of their local municipality truly have the best interests of your business in mind.

Rick Murray is CEO of the Arizona Small Business Association, which has a Southern Arizona office at 4811 E. Grant Road, Suite 262, in Crossroads Festival.


Source: Inside Tucson Business

May the Workforce be With You


Date: Friday, October 28, 2016
7:45 AM - 9:00 AM
GateWay Community College Copper Room


ASBA's Fantasy Lights Holiday Soiree


Date: Thursday, December 1st
6:00 PM - 9:00 PM
Stone House Pavilion at the Phoenix Zoo

Get $5k-$20 in Free Marketing: Make 2016 Your Year for Success!

In Business Magazine

Use In Business Magazine as a tool to reach your customers for 2016. Through Print, Online, Social Media, Email & Events, you can realize an additional $5k to $20k in free advertising with In Business Magazine over 2016.


Small is the New Black


What’s trending for 2016? Small Business! This year, resolve to support our local economy by “Thinking Small” at least one time each week! Need help finding a small biz? Visit! #ThinkSmallBiz


Allowing you to concentrate on what’s really important.

Low and Johnson Inc.

We understand the insurance needs of locally-owned businesses because we’re one, too. As an ASBA member backed by CNA, we’re dedicated to helping small businesses like yours safeguard all you've worked so hard to build.



ASBA 101


Date: Held monthly
Time: Click to check times
Location: Phoenix or Tucson


ASBA Speed Networking


Date: Every 2nd Tuesday of the Month
Time: 3:30 PM - 5:00 PM
Location: Phoenix or Tucson

You're important to us and we want to help protect you

Mutual of Omaha

and your family through the use of insurance products. As a valued association member, you have the opportunity to purchase an insurance policy with lower premiums and/or enhanced benefits not available to the general public. Click here to learn more.


Have questions on small business and health insurance?

Health Insurance

Get the latest on individual, sole proprietor, or group plans related to small business. We can help you find the right plan for you, and your employees. Click to learn more!


CopperPoint Insurance Companies

CopperPoint Mutual

CopperPoint Insurance is Arizona's premiere provider of workers compensation insurance. We've been providing coverage and advocating for Arizona businesses, small and large, throughout the state since 1925.


Association Management Software Powered by®  ::  Legal