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News & Press: Arizona Business News Updates

Temporary 1-cent Arizona sales tax ends

Monday, June 03, 2013   (0 Comments)
Posted by: Rhette Baughman
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PHOENIX -- Arizona shoppers and businesses will have extra cash in their pockets starting this weekend with Friday's expiration of a temporary 1 cent sales tax approved by voters three years ago.

"I have in my hand the document establishing the Proposition 100 tax in the Arizona Constitution," Arizona Gov. Jan Brewer said. She then ripped the document in half and declared the tax to be over.

Starting Saturday, the state's sales tax rate will drop to 5.6 cents on the dollar, down from the 6.6 cents that was in place since June 1, 2010.

The tax brought more than $900 million into the state's coffers each year and helped the state avoid bigger budget cuts during the height of the recession.

The tax ``prevented truly devastating cuts to education, public safety and health and human services,'' said Gov. Jane Brewer, the tax increase's chief proponent.

The sales tax increase appeared on a May 2010 special election ballot as Proposition 100. Voters approved it 64 percent to 36 percent.

``We already knew that dire cuts were coming down the pike, and we know that without the passage of Prop. 100 it would be even worse,'' said Bobette Sylvester, assistant superintendent of Mesa Unified School District, the state's largest district.

According to KJZZ, Sylvester said that even with the extra money, Mesa Unified still had to lay off teachers and forgo building repairs and new textbooks. But, the sales tax money saved some jobs and programs, she said.

Brewer pushed the Legislature to ask voters to approve the tax during the depths of the recession as plummeting state revenues triggered massive state budget cuts.

It took Brewer about a year to get the Republican-led Legislature to put the increase on a ballot. Opponents said the increase would hurt the economy and ultimately would be made permanent.

Last November, however, Arizona voters rejected an initiative measure by education advocates and others to extend the 1-cent increase indefinitely. Under the proposal, the money would have been designated for education and certain other state services.

Brewer opposed the 2012 proposal, and on Friday she noted that the temporary tax was expiring as planned and on schedule.

``A promise made and a promise kept,'' she said.

Arizona Small Business Association President Rick Murray said Brewer kept her promise that the tax would expire in three years.

"This temporary sales tax is just that: temporary," said Murray. "Too many times we see when government has their hands on the money, they are reluctant to let loose of it. This is just one of the many initiatives that this governor has done to be able to further fuel our state's economic recovery."

Had the state not raised the extra $2.7 billion from the tax increase, Arizona's economy would have likely faced long-term problems, economist Alan Maguire said.

``What the temporary tax did was it gave people a sense of assurance that Arizona was going to be moving forward in a rational, calm, orderly fashion, and that encouraged businesses who might otherwise have been afraid to invest in Arizona to invest in Arizona,'' Maguire said.

Source: KTAR



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