Arizona House Moves To Permanently Bypass State Sales Tax On Digital Goods

By Holliday Moore
Howie Fischer, Capitol Media Services
Published: Thursday, March 1, 2018 - 8:36am
Updated: Friday, March 2, 2018 - 3:02pm

As Arizonans gravitate toward more shopping online, GOP state lawmakers want to simplify the way consumers are taxed at the local level.

The House voted Wednesday to forego ever collecting the 5.6 percent sale tax on digital products including online books, videos, cloud-based software, storage and web hosting services.

Members voted 39-to-19 with bi-partisan support in favor of Rep. Michelle Ugenti-Rita's proposal, sending it onto the Senate.

"This was born out of the desire to provide clarity to taxpayers, uniformity and give businesses an idea of what we're taxing," Ugenti-Rita said. "There's nothing in statue ... that deals with digital goods and digital services."

Several Democrats are concerned with permanently bypassing digital taxes, especially as technology rapidly changes.

"Revenues are declining because we continue to give tax credits away," said Democratic Rep. Isela Blanc. "And now we are proposing to not even collect revenue.''

Although the revenue stream from digital dollars is still "inconclusive," Blanc reminded fellow lawmakers that nearly half of the state's $9.5-billion budget relies on retail sales, which are being eroded by the digital market.

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