PHOENIX (AP) — A proposal that would overhaul Arizona's complex sales tax collection process got a frosty reception from cities and towns but a strong endorsement from business leaders before unanimously passing its first Arizona House committee Monday.
The proposal from Gov. Jan Brewer is designed to ease the burden on businesses, and business leaders hailed the bill for its intent of cutting red tape and complexities.
Cities and towns object because of the way the measure shifts taxation of new construction. It's now based on where the building is done, so growing areas get added revenue, but Brewer wants it changed to where the materials are sold.
The legislation doesn't affect how consumers pay sales tax.
Maricopa Mayor Christian Price testified at the House Ways and Means committee Monday that his city would lose millions in revenue a year because of the construction tax changes.
"Let's call a spade a spade here. At the end of the day this is going to boil down to numbers," Price told Ways and Means Committee members. "There are 91 cities and towns in this state that are very much opposed to this construction tax change."
An amendment designed to ease the loss to municipalities was adopted, but cities said even with that change, the losses could decimate their cities.
"If you don't want to see some of these become ghost town, like the city of Maricopa, they you need to listen to what we say," Price said.
The bill would unify the state's sale tax collection system, creating one return, one payment and one audit. That would replace multiple versions of each that businesses operating in multiple jurisdictions must deal with.
Business leader after business leader called for adoption of the proposed overhaul, calling the current system overwhelmingly expensive and outdated.
The bill has bipartisan support, but also bipartisan opposition to the part that changes the construction tax.
House and Senate leaders said after Brewer rolled out her formal proposal last week that it would have to undergo major changes before it wins passage.
Democrats on the committee said Monday that they voted to move the bill despite misgivings about its current form.
Major revisions are expected to address towns' concern.