Phoenix has been particularly promiscuous in doling out GLPETs, turning downtown into a property tax free zone. The Arizona Tax Research Association calculates that Phoenix has removed around $1.5 billion in commercial real estate from the property tax rolls.
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The bill, while not abolishing GPLET, would change some of the more controversial aspects of the program by forcing lessees back onto the property tax rolls after eight years, a change from endless lease deals. It would also require local governments collect the tax.
Local governments claim that “but for” these tax breaks, new development would not occur. City Hall proudly cuts the ribbon to the new restaurant or hotel while neighbors look on wondering why they pay the full rate. The truth is the “but for” argument is impossible to prove.
“‘Tax expenditures’ is grounded in the notion that everything, all wealth, in Arizona is subject to tax, that which we get to keep is a ‘tax expenditure,’” McCarthy said.
“Fundamentally, what you are doing is you are going into the state general fund and you are appropriating dollars to a private concern,” Sean McCarthy of the ATRA told the Arizona Republic.
NAIOP-AZ was among the real estate groups opposed to the new bill but worked out some compromises with the legislation's sponsor, Rep. Vince Leach, R-SaddleBrooke, and the Arizona Tax Research Association. The measure now moves its way to the Arizona Senate.
Sean McCarthy challenged the Coyotes’ argument that the team is creating new tax dollars by building an arena on a vacant site. “You are not creating new disposable income. You are moving dollars around,” McCarthy said. “You can’t argue that moving dollars from one stadium to another is creating new dollars.”
“Fundamentally, what you are doing is you are going into the state general fund and you are appropriating dollars to a private concern,” said Sean McCarthy of the Arizona Tax Research Association.
This is not a $211 million cut to education, as critics are trying to spin it. There might be no reduction in funding, depending on what local voters do. But there would be an end to taxation without taxpayer accountability. What’s the argument against that?
"We don’t think that it’s rational that the taxpayers would be paying for this on a permanent basis," said Kevin McCarthy.