Arizona Voters Asked To Ban New Sales Tax On Services

Published: Tuesday, October 23, 2018 - 5:10am

Right now, Arizona consumers pay state sales tax on most products, but not services. And that’s how an Arizona Realtors group wants to keep it.

If approved by voters in November, Prop 126 would forbid the state, along with counties and cities, from imposing a new sales tax on services — things like haircuts, bookkeeping and child care.

Patrick Lewis with the Arizona Association of Realtors recently told KJZZ’s The Show why his group launched the initiative.

“We feel now is the time that we should really have a constitutional amendment so that those that provide these services — who are already paying income tax — aren’t doubly taxed,” he said.

But, David Lujan with the Arizona Center for Economic Progress, said Prop 126 isn’t fair.

“What it does say is certain businesses are going to get protections while others won’t,” he said. “If you’re a mom and pop bookstore or hardware store, you’re not going to get the special protections that these other industries will get.”

As a former state lawmaker, Lujan thinks all options should be on the table. He pointed out that state lawmakers have not increased taxes since 1992 when voters approved a constitutional amendment requiring at least two-thirds of state lawmakers approve any tax hike.

But Prop 126 supporters say lawmakers can get around that as long as they reduce taxes in the same amount someplace else.

“The last bill was run as a revenue neutral bill so therefore it did not require the two-thirds majority,” said Lewis. “So, that was a way for them to sidestep that role.”