By Matthew Holloway |
Arizona’s Republican lawmakers are looking to take on the cost of groceries by sending a referendum to the voters that would cap the transaction privilege taxes in municipalities on the sale of food items for home consumption at 2 percent.
The effort has been led by Republican State Representative Leo Biasiucci. It initially began as an outright ban, which proved to be a non-starter with State House Democrats and Governor Katie Hobbs. A bill to accomplish this was already dead on the table with the prospect of a veto from Hobbs, but this has been sidestepped through a compromise, HCR 2021.
“These are things that families need to survive,” Biasiucci told AZ Capitol Times. “This is the right thing to do. The fact that we are taxing people on eggs and milk and bread is insane.”
In a post to X Biasiucci wrote, “My bill to remove taxes from all essential food items like milk, eggs, butter, vegetables, fruit, baby food, beef and chicken passed committee 4-2. My bill also removes taxes from diapers. Taxing our food is regressive and it needs to end.”
A previous version of the measure passed both chambers of the legislature in 2023 only to suffer a prompt veto from Hobbs after the leaders of several municipalities claimed city services, including police and fire departments, would need to be reduced without tax revenue from food sales. In her veto letter, Hobbs claimed, “It’s clear that this bill doesn’t actually eliminate costs for our residents. It simply moves those costs around.”
Rep. Neal Carter, a Republican from San Tan Valley told the Times that there have been significant increases in municipal sales tax revenue from online sales after the SCOTUS ruling in South Dakota v. Wayfair. The outlet reported that from 2019-2024, cities and towns have enjoyed a 60% increase in sales tax revenue, but city expenses have also increased in that time period as well, leaving the local governments reticent to cut spending.
“This is a terribly regressive tax. This is the most regressive tax I could possibly dream up,” Carter told the outlet. “If I was going to dream up a regressive tax, I would tax the one thing that you literally have to have to live. You don’t even, in a sense, have to have a home to live, but you have to have food.”
“I don’t know a single person in Arizona, a voter or a constituent, who’s going to say, ‘Yes, continue to tax me on these things that I have to put on the table for my family,’” Biasiucci told his colleagues. “At a time when inflation is through the roof, these taxes are going higher. You’re paying more.”
Under the compromise passed in the House, a city or town with a tax rate below 2% could elect to increase it up to the limit with voter approval. However, with approximately 70 of the 91 municipalities charging taxes on groceries ranging from 1.5% to 4%, some municipalities would be required to reduce their taxes and either reduce spending or increase taxes in other areas such as property tax.
After passing the House with limited Democrat votes and near total Republican support, the resolution was read in the Senate on March 10th and 11th and is pending review by both caucuses and a final vote.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
