As we look over the legislative landscape, it is evident that three topics will be dominating legislative activity now and for the foreseeable future. They are taxes, elections, and education. While elections and education tend to affect primarily political freedom, taxes tend to affect economic freedom.
Sales taxes on food and rentals are among the most recessive taxes that can be levied, for two reasons. First, these taxes cannot be avoided because food and shelter are basic necessities. Second, at the lower income levels, paying for food and rent comprise an increasingly larger portion of the household budget.
While eliminating taxes on rent and food are always a good idea, they become imperative during periods of runaway inflation and tanking retirement programs, which is exactly what we currently have.
- The government already collects property tax on the property and should not also charge the tenant a tax for that same property. It’s unfair to make tenants do so every time they make their rent payment.
- Inflation for Metro Phoenix is higher than the national average at 9.5% because of high housing costs.
- 70 municipalities within Arizona charge this rental tax. In the Valley specifically, Phoenix charges 2.3%. Surprise and Glendale both charge 2.2%. Mesa is at 2%. Peoria and Tempe charge 1.8%. Scottsdale is at 1.75%. Chandler and Gilbert are at 1.50%.
- This money could instead cover an extra tank of gas, groceries, an electricity bill or a medical bill for our hardworking families and small business owners.
- Eliminating this tax would not negatively impact funding for cities and towns because right now, state and local governments financially strong.
- From fiscal years 2019 to 2022, state-shared revenues from both sales and income taxes combined grew $330 million, or 27%. This increase is on top of any sales taxes or property taxes individually levied by each city.
- Between this fiscal year and next, those shared revenues are expected to grow by an additional $889 million.
- In fact, without eliminating this tax, over the next four fiscal years, cities and towns are estimated to receive an average of $2.3 billion per year in state-shared revenues, which is an increase of $844 million more than the average for the last four fiscal years.
Government officials have an obligation to provide relief in these two areas during these troubled times, and that is exactly what the Republicans in our legislature, under the leadership of President Warren Petersen and Speaker Ben Toma are doing.
Sen. Petersen argues that “government has done extremely well over the last few years by adding a record amount of revenue. Unfortunately, hardworking taxpayers are reeling during this period of runaway inflation and are having a tough time paying for the most basic necessities.”
As a result, Petersen is proposing four actions the Legislature can take to counter the effects of rising costs and help Arizonans who are living paycheck to paycheck:
Eliminate the Rental Tax: Government makes plenty of money from the income tax charged to landlords. Tenants should not also be required to pay a tax. People who own the homes don’t pay a tax every time they make their mortgage payment. Tenants shouldn’t have to either. This initiative alone can put thousands annually into the pockets of tenants.
Eliminate the Food Tax: Food is not a luxury. It is a necessity. This tax is regressive and hurts the poorest of the poor. Fortunately, many cities do not charge a food tax. Let’s ban it completely.
Increase the Housing Supply: 20 years ago, you could take a property from dirt and build a house within six months. Those days are long gone as a litany of hurdles have been placed in obtaining approvals for land development and housing. Now, it can take as long as four years! Let’s increase the housing supply by shortening this window. One way to accomplish this is through administrative approvals for all projects that meet all existing laws and requirements.
Reduce or Eliminate Occupational License Fees: Whether you’re a barber, realtor, loan officer, contractor, or other licensed professional, you are required to pay fees to the state to hold your license. Let’s cut those in half or eliminate them altogether. This step will put hundreds of dollars back in the pockets of our hard-working taxpayers.
For example, on the House side, Rep. Leo Biasiucci has introduced house bill HB2061, which calls for the elimination of sales taxes on foods for home consumption. This is a bipartisan bill, with 35 cosponsors, 1/3 of which are Democrats. It recently cleared the Ways and Means Committee. In the Senate, a bill with identical language, SB1063 has been introduced by Sen. Sonny Borrelli.
We strongly recommend that citizens contact legislators and express support for Biasiucci’s bill and support President Petersen and Speaker Toma in this effort.
Currently, there is only one other state that imposes a tax on residential rentals, and only a handful of states allow municipal taxing of food for home consumption.
In addition to providing very needed relief for hard working Arizona families, eliminating these taxes will place Arizona in the mainstream of states.