A "value-added" tax applies to every transaction a product or service undergoes. File photo
Arizona state leaders have crafted SB 1144 to increase state revenue through reduced tax exemptions.
Past tax exemptions have “cost the state more than $12 billion a year,” Pinal County online reported. “Those exemptions dwarf the $4.3 billion the state collected last year in sales taxes to support a $9.6 billion spending plan.”
The new bill, authored by Sen. Steve Farley (D-Tucson), plans to extensively review current exemptions.
“If you don’t look at these things in the first place, you can’t get rid of the bad stuff in the tax code,” Farley said.
Sen. David Farnsworth (R-Mesa) said he would favor eliminating the state's income tax.
"The more money Arizona can generate from sales taxes means less the state would depend on individual income taxes,” he said.
Additionally, some leaders in the legislature are contemplating whether putting a tax on every service instead of the entire bill would be better. Arizona currently taxes only a final purchase. Under a European system of "value-added" taxes, every transaction is taxed each time a product or service changes hands.
The Arizona Constitution requires a two-thirds vote for new taxes or to eliminate an existing tax break.