Arizona, and specifically Cochise County, is close to killing the goose laying golden eggs.
With one exception, the county and its seven municipalities are nearing the limit of what is tolerable for the sales tax. Add in the potential for an increase at the state level and a proposal to create a jail district, and suddenly our tax burden threatens the local economy.
Arizona is already ranked 11th highest in the nation for its sales tax by the Tax Foundation, a respected independent tax policy nonprofit since 1937. Now there are serious discussions among state lawmakers of boosting the sales tax to generate more funding for education.
We understand that thinking, since it’s been more than 18 years since the last increase, but we also believe lawmakers need to recognize the impact of that decision on local municipalities. Starved for state-shared revenue since the the Great Recession beginning in 2008, cities and counties in Arizona have turned to the sales tax to keep up with the rising cost of government.
That’s resulted in rates of 9.6 percent in Benson, Bisbee and Tombstone, and 9.1 percent in Willcox. While the state sales tax rate has stayed steady at 5.6 percent, these communities have relied on increasing local collections to maintain public services.
The lone exception to this is Huachuca City, which boasts the state’s lowest overall tax rate of 7.6 percent. Sierra Vista is close behind with the state’s fifth-lowest rate at 8.05. Douglas is at 8.9 percent.
While these rates may be considered reasonable at the moment, let’s add another full percent to the bottom line to pay for boosting the state’s education fund and creating a jail district in Cochise County.
With those additions, Benson, Bisbee and Tombstone are collecting almost 11 percent on every transaction covered by the sales tax, and the option of adding a little more to pay for increases in the cost of public services has vanished.
Cochise County’s poverty rate over the five-year period from 2012 through 2016 was 18.9 percent. That was higher than the statewide rate of 17.7 percent and the national rate of 15.1 percent during the same period.
Increasing a regressive tax, which collects a disproportionate amount from the poor, isn’t going to make things better.
Reprinted from Sierra Vista Herald/Review