Arizona Votes Today on Sales Tax Increase

May 18, 2010

Joseph Bishop-Henchman

Joseph Bishop-Henchman

Arizona voters go to the polls today to decide Proposition 100, which will raise the state’s sales tax by one percentage point for three years.

Arizona’s combined 7.92% sales tax is the 9th highest now, and if the rate goes up a point, it will become the 3rd highest. That’d be behind only Tennessee, which has no wage tax, and California, not a state to emulate for fiscal policy.

And although is true that Arizona is a relatively low-tax state, they are middle-of-the-road on business tax climate.

Click on the image for larger size version of the “State Business Tax Climate Index” map. Click here for the map in printer-friendly or alternative formats (PDF, TIFF).

More on sales taxes here.

More on Arizona here.

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A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

A sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding.