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The problem with the sales tax is that it shifts the burden of public sector services further onto the backs of the working poor and deeply impoverished - while the rich are simultaneously getting all sorts of new breaks. Sales tax hurts lower income families the most...
Why fix the budget on the backs of those who have already been most brutalized in this recession, who aren't even to blame in the first place for this crime?
by Betty Beard - Apr. 11, 2010 12:00 AM
The Arizona Republic .
Would a higher sales tax help or hurt Arizona businesses?
Businesses and business groups are lining up on both sides of the proposed statewide 1-cent-per-dollar sales-tax increase. Some say it will hurt them by reducing consumer spending and hiking costs. Others say the tax is needed to support the overall state economy.
Businesses generally oppose tax increases on themselves or their customers, but a number of high-profile groups are supporting Proposition 100 in the May 18 election because they consider it necessary to improve the state's fiscal picture and prospects for economic development.
"You generally don't see business organizations supporting tax increases," said Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. "But I think in this case, the near-term budget situation is deemed serious enough that some sort of temporary revenue enhancement was needed to prevent further (budget) cuts."
As the election approaches, both factions can point to reports that support their points of view on the proposed tax increase.
A study commissioned by the Goldwater Institute and conducted by the Beacon Hill Institute in Boston says passage of Proposition 100 would cost the state about 14,400 private-sector jobs because it would reduce the consumer spending that supports retail jobs.
A conflicting study by the Economic and Business Research Center at the University of Arizona says passage would save more than 13,000 jobs and preserve more than $442 million in federal matching funds because much of the estimated $918 million in increased revenues the state would receive would be spent on products and services provided by private companies.
Hamer said the Arizona chamber supports the tax as part of a comprehensive package that includes the state Jobs Recovery Act, which would give tax breaks to businesses in hopes of encouraging them to increase hiring.
The chamber and Greater Phoenix Leadership, a business coalition, have each contributed $50,000 to the Yes on 100 Committee, according to the Secretary of State's Office.
Arizona Public Service Co., Magellan Health Services, Scottsdale Healthcare and Tucson Medical Center have each given $25,000. Other companies making large contributions include Honeywell International PAC, which gave $15,000, and Sundt Companies Inc., Resolution Copper Mining and Corrections Corp. of America, each $10,000.
Also at least eight chambers of commerce have thrown in their support for the tax increase, including those representing Phoenix, Mesa and Tucson.
The Arizona Retailers Association, representing about 1,700 businesses, is remaining neutral.
Michelle Allen Ahlmer, executive director, said that while businesses are concerned a sales-tax increase of even a penny on the dollar would cause sales to dip, they are willing to let voters decide.
"There's no question that is a concern," she said. "But it looks a little self-serving for us to tell the public they can't make that decision."
Board member Jim Willinger, owner of Wide World of Maps Inc., strongly opposes the sales tax. He fears it will hurt businesses by reducing sales and driving up costs for things such as office supplies.
"I buy all the things that have sales taxes, too," he said.
The National Federation of Independent Business strongly opposes the tax hike. The group has about 7,500 members in Arizona.
Farrell Quinlan, Arizona state director, contends that when times are tough, governments have to economize like everyone else.
"A lot of businesses have had to lay off workers, cut back hours and change their benefit plans, not in some greedy attempt to wring out more profits but just to survive," he said.
The tax increase would have a large effect on vehicle purchases. It would add $260 to the average price of a new vehicle, $26,000.
Don Luke, owner of Bill Luke's Chrysler Jeep and Dodge in Phoenix, said most car and truck buyers, though, don't pay much attention to taxes, licenses and other fees. They tend to focus on the base price of the vehicle.
"I don't think the sales-tax increase would discourage car buying," Luke said. "We are such a large-ticket item that 1 percent is not going to affect it that way."
Nevertheless, he said of the proposed tax hike, "I am really not horribly in love with it. I simply have never seen a temporary tax that did not become permanent, and this state and this city has always been capable of spending everything they collect."