Goldwater Institute filed in state tax court, requesting a trial
Making good on a threat that an advocacy group made to Pinal County officials last September, a suit has been filed in Arizona Tax Court asking that a recent ballot proposal be struck down.
Proposition 417, which narrowly passed in November, enacts a transportation excise (sales) tax that is to be collected and spent on roads, infrastructure and other projects over the next 20 years.
The Goldwater Institute has challenged the tax as unconstitutional. In a public statement, the conservative think tank stated: ”Arizona voters in Pinal County are challenging an unconstitutional sales tax that was enacted through a misleading ballot proposal, and the Goldwater Institute is asking the Arizona Tax Court to strike it down. The tax unfairly and illegally targets everyday residents, while exempting politically connected businesses; unfairly hurting taxpayers, while also hindering economic development.”
The concerns that were brought to Pinal County officials last September include: The actual language of proposition 417 created confusion over who and what would be affected by the proposed tax; the proposition said that the tax would only apply to retail sales of items below $10,000; the new tax disproportionally hurts people who aren’t rich and businesses that aren’t well-connected by creating a new set of tax brackets; it’s unjust and unconstitutional for a county to design a tax to give a break to influential businesses.
“Arizona law allows counties to adopt such taxes, but requires them to tax specific things in specific amounts—including utilities, prime contracting, job printing and pipelines,” states the Goldwater Institute. “But inconsistencies between the ballot pamphlet explaining Proposition 417 and the actual language of that proposition created confusion over who and what would be affected by the proposed tax.”
“This tax is confusing and poorly written, and it was passed under questionable circumstances,” said Timothy Sandefur, vice president for litigation at the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation. “Voter information pamphlets led Pinal County voters to believe that the tax would comply with state law. But the actual proposition said that the tax would only apply to retail sales of items below $10,000. That is both unfair and illegal; Arizona law specifies what must be taxed when a county creates a transportation excise tax, and it doesn’t allow counties to create their own rules.”
According to Pinal County, the tax will be 0.5 percent on sales of retail items up to $10,000—but then nothing beyond that dollar amount. “Under Pinal County’s new law, big-ticket items—namely cars—are taxed at a lower rate than inexpensive purchases,” said Matt Miller, senior attorney at the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation. “It’s unjust and unconstitutional for a county to design a tax to give a break to politically influential businesses by exempting them just to get their support for the tax. But that’s exactly what happened in Pinal County.”
In their statement, Goldwater Institute’s Sandefur criticized Pinal County’s track record of directing tax collections to where they are supposed to be spent. “Pinal County has a track record of… telling taxpayers that their taxes are being collected for one purpose, but then spending the money on another. For example, the County adopted a 0.5 percent tax to fund transportation projects 15 years ago, but the money was used for other purposes instead—some of them improper.”
Documents pertaining to the recent complaint can be found online at The Goldwater Institute website.