What is being discussed in the Arizona State Legislature is increasing the state sales tax from 5.5 percent to 6.6 percent, and the local sales tax and state tax would be added on as they are now.
Sedona Assistant City Manager Alison Zelms said increasing the sales tax could result in making the revenue streams for the state more stable.
She said a lot depends on what it would mean to the state to increase its sales tax by 1.1 percent.
“Would that go to the state?” Zelms asked, in wondering if Sedona would see any amount of the increase.
However, the state cannot raise the state sales tax. Only voters can change the tax rate. The state could put the issue on the November ballot, though.
“If approved, it gives us more confidence in state sales tax but will [give us] no significant increase,” she said, adding the city’s sales tax rate would stay the same at 3 percent.
Tom Belshe, deputy director of the Arizona League of Cities and Towns, said if the increase is approved by voters, consumers might decide to shop less.
However, he said voters need to decide if they want valuable service like police and education to be cut further or if they want to pay another 1 percent in state sales tax.
He said if it comes to a referendum and voters oppose increasing the tax rate, the state would almost have to reduce the budgets of state agencies to go on top of the cuts already made.
“People want more services, not less,” he said. “It’s one or the other.”
He also said the extra 1.1 percent would go directly back to the state and the communities collecting it would see none of it.
He said since the additional sales tax would affect the entire state, it would not be a deterrent for people to travel to other areas in the state. He said the 1.1 percent would affect Sedona, Phoenix and every other city and town.
“It’s a state tax that you can’t escape,” Belshe said. “People [would] definitely spend
less because of the additional tax.”
He said businesses thinking about moving to Arizona may not do so if they see these type of services are being cut.