On Monday, the Arizona Senate is planning to consider SB1392, another permanent tax cut. This cut would leave our already anemic state budget with another $120 million loss that will grow exponentially over time, according to projections from the Arizona League of Cities and Towns. The cut will also slash $14 million from Prop 301 revenues, a direct cut to teacher pay.
Two very worrisome bills are being fast-tracked in the legislature that will exempt digital purchases from state sales tax, taking millions from the general fund and seriously damaging public services, especially education. SB 1392 exempts from sales tax online purchases of goods and services that are currently taxed. This tax cut also moves other types of sales to a different tax category, called a use tax, that is harder to collect and that does not contribute to the dedicated fund for teacher pay, known as Prop 301, according to the Children’s Action Alliance. One example: If you buy Microsoft Windows software today, you pay sales tax regardless of whether you purchase it at a store or the cloud version. Under these bills, the software you purchase in the store will be taxed but the same product you access online will be exempt from sales tax. (The House counterpart to this Senate Bill is HB2479. There are some slight differences which could be easily reconciled if SB 1392 passes on Monday.)
Based on data from a sample of cities, the Arizona League of Cities and Towns estimates that these tax cuts will reduce state revenues by at least $120 million at the beginning. This amount will grow over time as more and more commerce is conducted in the cloud. The League also estimates these cuts will reduce revenue from Arizona’s education sales tax, Prop 301, by $14 million annually which will be a direct cut to teacher pay at a time when teacher salaries are already the lowest in the nation. You can see the Children’s Action Alliance details of the budget analysis here.
Sylvia Allen claims to be for education. Let’s see how she votes on this. Contact Sylvia Allen
Monday night update: It doesn’t appear that this came up for a vote today. We’ll keep an eye on it.
Friday night update: We’re still watching.
March 15 update: Still on the pending list and we’re still watching