House committee kills bill requiring review of sales tax exemptions

Arizona Daily Star
Thursday, March 16, 2017
Howie Fischer

PHOENIX — Saying it would send the wrong message, Republican lawmakers voted Wednesday to kill legislation that would simply require them to review the $12 billion a year the state could potentially collect in sales taxes if all exemptions and exclusions were eliminated.

The vote by the House Ways and Means Committee came after Kevin McCarthy, president of the business-backed Arizona Tax Research Association, derided the idea that the state is somehow forgoing that much money.

McCarthy conceded that special-interest lobbyists do come in from time to time to get lawmakers to spell out that they should not have to pay the state’s 5.6 percent sales tax on various things their company or industry has to purchase. And he told lawmakers that, in general, ATRA supports a broad-based tax with the lowest possible rates.

But he said the whole idea that a state with a $9.78 billion budget is giving away $12 billion a year in possible income — what the Department of Revenue for legal reasons calls “tax expenditures” — is flawed.

“‘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,’” he said. Instead, McCarthy said, it represents some basic decisions by lawmakers historically that certain activities are not subject to taxes.