by Matthew Holloway | Jun 14, 2024 | Economy, News
By Matthew Holloway |
The owners of the businesses that power the economy of southern Arizona are about to see some long overdue relief from a 2018 excise tax which was struck down by the State Supreme Court in 2022. Affected businesses will be able to file for a waiver or refund of the tax by April 9, 2026 to recover at least $87 million that was unlawfully collected by the county with another $4 million in interest to be paid out proportionally. Unfortunately, consumers who paid the tax as part of a transaction, will be unable to seek a refund.
The Pinal County transportation excise tax was invalidated by the Arizona Supreme Court in Vangilder v. Arizona Department of Revenue, in which the court found that the Pinal County Board of Supervisors violated state law by adopting a “two-tiered retail transaction privilege tax (TPT) on tangible personal property as part of a transportation excise tax.” While the court held that the basis of the tax was lawful, it invalidated the two-tiered system where the first $10,000 of any one item was taxed at one rate and any in excess was taxed at zero percent.
Arizona Supreme Court Justice Kathryn H. King, a former Deputy General Counsel in the Office of Governor Doug Ducey and appointed by Ducey wrote for the court:
“For the foregoing reasons, we conclude that Pinal County complied with state law in adopting the transportation excise tax. We further conclude, however, that state law does not permit Pinal County to adopt a two-tiered retail TPT structure as part of a transportation excise tax, whereby the first $10,000 of any single item is taxed at one rate and any amount in excess is taxed at a rate of zero percent. For that reason, Pinal County’s two-tiered retail TPT structure in Proposition 417 is unlawful and invalid.
Accordingly, we affirm the court of appeals’ opinion in part and vacate in part. We vacate paragraphs 2 and 23–30 of the court of appeals’ opinion. We affirm the superior court on other grounds. We deny Vangilder’s request for attorney fees.”
The filing opportunity was announced in a letter from the Arizona Auditor General on May 17 according to The Center Square. The letter detailed that approximately $87 million was collected through the excise tax which has earned $4 million in interest adding that the ‘applicable interests” would be paid out to those requesting a refund as well. However, the actual consumers who paid the 0.5% sales tax up to the first $10,000 have no such recourse because of the “transaction privilege tax” status of Arizona the outlet noted cited the Pinal County website.
The Auditor General wrote, “Between April 1, 2018, and February 28, 2024, the Pinal Regional Transportation Authority did not expend any of the 2018 Excise Tax revenues or accrued interest.”
The county website explained, “Specifically, taxpayers who will be able to request a refund or waiver of monies paid toward this invalidated tax are generally limited to those businesses that filed and paid tax to the Department for the April 2018 through March 2022 tax periods as part of their overall transaction privilege tax liability, for business activity that they conducted either in Pinal County or with Pinal County customers.”
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.
by Daniel Stefanski | Aug 1, 2023 | News
By Daniel Stefanksi |
Reaction was mixed to the news that the Arizona Legislature passed a Prop 400 compromise on Monday, after an agreement was forged with the Governor’s Office.
Republican Senate President Warren Petersen claimed victory after his chamber gave the proposal the green light, calling it “the most conservative transportation plan in our state’s history.” Petersen added, “The guardrails, taxpayer protections and funding allocations in the text of this bill reflect the priorities of voters, to reinvest their tax dollars in the transportation modes they use most.”
Democrat Governor Katie Hobbs was diplomatic in her statement, saying, “Today, bipartisan leaders invested in the future of Arizona families, businesses, and communities. The passage of the Prop 400 ballot measure will secure the economic future of our state and create hundreds of thousands of good-paying jobs for Arizonans. I am glad we were able to put politics aside and do what is right for Arizona.”
Some legislative Democrats took the legislation’s approval to point political fingers at their Republican counterparts. Senate Democratic Leader Mitzi Epstein wrote, “As is customary, Republicans have waited until the very last minute to pass widely popular legislation that invests in the daily lives of Arizonans….Our state should not have had to wait until July 31st to see this measure, which has had legislative support since the start of session, get sent to the ballot. However, with the support of Arizonans cities and towns, I am proud to join my Democratic colleagues in delivering the key votes needed to send the extension of the regional transportation tax back to the voters of Maricopa County.”
Members of the Arizona Freedom Caucus were adamantly opposed to the bill since the weekend, when they appeared to have read a draft of the legislation. After Prop 400 passed, the Freedom Caucus tweeted, “Legislative conservatives near unanimously opposed this horrible bill. Conservative watchdog groups unanimously opposed it. The bill may have been better than the communists at @MAGregion’s horrific plan, but that’s a ludicrously low bar for success. This bill was antithetical to conservatism.”
Freshman Republican Representative Austin Smith, who has become one of the leading voices in the Arizona Freedom Caucus this legislative session, was one of the most-outspoken members against the bill since the weekend. He explained his vote on Twitter, posting, “I voted NO on the prop 400 transporation excise tax for Maricopa County. Taxpayer dollars are not ours to dish out haphazardly – especially to the tune of 20 BILLION dollars with potential consequences that ruin valley transportation.”
Some legislative Republicans, including Representative Jacqueline Parker, were already thinking about messaging against the ballot measure in hopes that voters could stop the plan from becoming finalized. Parker tweeted, “Now it’s up to the voters in Maricopa county to read the 47 page bill & see if it’s worth $20 Billion. I recommend looking at provisions on pages: 8, 15, 16, 18, 21, 22, 34, & 35, which absolutely allow plenty of leeway for cities to implement their road diet, & transit expansion.”
The breakthrough on the Prop 400 compromise took place after Governor Hobbs vetoed a Republican proposal in June. At that time, Hobbs stated, “I just vetoed the partisan Prop 400 bill that fails to adequately support Arizona’s economic growth and does nothing to attract new business or create good-paying jobs.”
In May, the governor created unrest over ongoing negotiations, allegedly sending out a tweet that highlighted her fight with Republicans at the Legislature at the same time she was meeting with Senate President Warren Petersen.
Petersen, one of the most conservative members in the state legislature, championed the importance of the bill, asserting that officials had “secured a good, responsible product for the citizens of Arizona to consider in 2024, giving voters the option to enhance critical infrastructure that our entire state relies upon.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
