Written by Mark Nichols
In Phoenix, Arizona, city officials have decided that as the result of budget deficits and the looming repeal of that city’s controversial “food tax,” they have to find new sources of tax revenue. That’s bad news if you own or operate an escort service, strip club, tattoo parlor or a “head shop,” the slang term for retail locations that sell items used to smoke marijuana as these organizations could be the next places Phoenix turns to for revenue if the city rescinds its controversial food tax.
Phoenix Mayor Phil Gordon and Councilman Tom Simplot recently asked management to consider what the city can do to raise money through “sin taxes,” and other fees if the city decides to repeal the 2 percent food tax.
Other ideas from Mayor Gordon include taxing false calls to police and fire dispatchers, as well as electronic billboards.
The food tax is scheduled to “sunset,” or go off the books in 2015.
But that tax is estimated to generate $50 million for Phoenix every year. It was approved in February 2010 as Phoenix was facing a $277 million budget shortfall.
Obviously calling for the repeal of the food tax is a gold mine during the city’s competitive elections for mayor and City Council. City Councilman Sal DiCiccio, who was not up for re-election this year, has been extremely vocal about getting rid of the tax in order to “force Phoenix to reduce spending.”
Gordon said that while he still supports the food tax, “in the spirit of intellectual curiosity” he wanted to look into other options should voters kill it.
In a political environment where taxes are more loathed and feared than Al Qaeda, some council members say the sin tax proposal is basically a trick.
Councilman DiCiccio has asked city managers to review how much the city could save if it eliminated employee-pay raises in its next round of labor negotiations. He said replacing one tax with another misses the point.
“They’re not talking about eliminating a tax – they’re talking about raising more taxes,” DiCiccio said.
Phoenix Finance Director Jeff Dewitt said the city already depends heavily on revenue from purchases such as pipes from so-called head shops and items from adult bookstores under its general retail sales-tax collections.
Taxing those business people further could have unintended consequences such as small businesses closing up shop and moving somewhere where they have to kick back less to the city coffers.
“We’ll evaluate everything we’ve heard tonight and see what’s feasible and what’s not,” Dewitt told reporters from the Arizona Republic.
One thing’s for sure, when you’re hitting up hookers and people that sell rolling papers for critical tax dollars, your city is in deep financial doo-doo.
Article from the pages of www.apbweb.com
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