Analysis shows impact of sales tax simplification unclear

March 13, 2013

A new analysis shows it’s unclear what kind of impact proposed changes to the state’s sales tax system would have on Arizona, and its cities. Those changes include charging contractors sales tax on their materials where they buy them, rather than a percentage of their project, and only allowing the state to conduct audits. From Phoenix, KJZZ’s Mark Brodie.

MARK BRODIE: The legislature’s budget analysts ran two scenarios – one based on assumptions made by the Department of Revenue, and one using a different set of assumptions. The results show the state either gaining $19.5 million, or losing more than $137 million. The numbers also show a disparity in potential results for cities. The League of Arizona Cities and Towns has been critical of the plan – especially the provision to change the way construction is taxed. But the bill’s sponsor, Republican Debbie Lesko of Glendale, says she believes the original estimates.

DEBBIE LESKO: I kind of trust that the people in the Department of Revenue believe very strongly in their numbers, and I don’t think they would just throw out inaccurate numbers, because I think they don’t want to lose their jobs.

BRODIE: Lesko says the revenue department projections were vetted over six months last year. Some of the variables include the cost of building materials as a percent of the total cost of the project and the rate of contractors who don’t comply with the current tax system.

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