Cities oppose changes to construction sales tax 

PHOENIX — Arizona’s cities and towns are worried a proposal to change how sales taxes are collected from building projects will severely cut the amount they receive from new construction.
The reforms outlined in a report by a task force appointed by Gov. Jan Brewer would have contractors pay sales taxes where they buy materials. That’s a big change from the current system that assesses sales taxes on a percentage of the project’s value.

The Arizona Republic reports ( ) the League of Arizona Cities and Towns estimates cities could lose $168 million a year. That’s because sales taxes that now go to municipalities where a project is built could instead be collected where construction materials are actually sold.

The potential revenue from construction-related taxes helps pay for crucial city services.

“In Scottsdale, we don’t have a lot of places where they purchase these materials,” said Brad Lundahl, Scottsdale government-relations director. “We would lose out on those taxes.”

The reform was outlined in a final report to Brewer on ways to simplify the state’s sales-tax system, which is often criticized as one of the most complicated in the nation.

The report includes a long list of concerns from the cities about the construction sales-tax change. Any change requires action by the state Legislature.

Read more: