Municipalities in Arizona would no longer be able to charge transaction taxes on groceries if Gov. Katie Hobbs signs a bill lawmakers approved Wednesday.
Senate Bill 1063, if enacted, would, in July 2025, ban counties and municipalities from applying a transaction privilege tax on grocery items. House lawmakers approved the bill on a 31-29 party-line vote Wednesday.
House Republican Majority Leader Leo Biasiucci, R-Lake Havasu, said cities had seen significant boosts in revenue from things like the Supreme Court’s Wayfair decision that allowed municipalities to tax internet purchases in their jurisdictions.
“When you look at their numbers, you have Wayfair that’s come into play. You have the urban share of revenue that’s going up 3% starting next year,” he said. “We have the room to make this happen to help every single struggling family in Arizona put money back in their pocket so they can spend it on things for their family.”
Democrats opposed the bill, saying the amount saved by an average family amounts to a couple of hundred dollars a year.
“When you’re saying that we’re going to save them money, it’s pennies-on-the-dollar,” said Assistant Minority Leader Lupe Contreras, D-Avondale.
Others added that cities had warned them of cuts to police and fire protection if they saw the revenue cut.
“We’ve heard in committee from municipalities that say ‘if you come and you pass 1063, you’re going to force us as cities to increase property taxes by 3% in order to continue the services that we currently provide,” said House Minority Whip Marcelino Quiñonez, D-Phoenix.
The Joint Legislative Budget Committee estimates the ban would reduce municipal revenues across the state by up to $195.6 million in the first year.
Supporters described the measure as an effort to counter recent inflationary pressure, in which the Phoenix metropolitan area has seen some of the highest price increases on groceries in America.
The bill now heads to Hobbs for her consideration. If she vetoes the measure, Republicans must convince several Democrats to change their votes and join them in overriding Hobbs.
Republished with the permission of The Center Square.
