FOR IMMEDIATE RELEASE
Monday, January 23, 2023
Tax Cuts on Food and Rent Will Provide
Struggling Arizona Families with Inflation Relief
PHOENIX, ARIZONA— In an effort to provide our hardworking Arizona families with relief from skyrocketing prices on basic necessities, Senate Republicans are championing two tax reforms on food and rent.
SB1063 (food; municipal tax; exemption) would eliminate the sales tax consumers pay when purchasing groceries, and SB1184 (municipal tax exemption; residential leases) would eliminate the tax tenants pay when making rent payments on a home. Last year, municipalities collected a combined total of $338 million from both taxes. Eliminating these taxes will allow families to save hundreds of dollars annually to use towards other essentials, without negatively impacting funding that cities and towns rely on to support public safety operations.
Currently, state and local governments in Arizona are financially strong. From fiscal years 2019 to 2022, state-shared revenues from both sales and income taxes combined grew by $330 million, or 27%. This increase is on top of any sales taxes or property taxes individually levied by each city. Between this fiscal year and next, those shared revenues are expected to grow by an additional $889 million. In fact, over the next four fiscal years, municipalities are estimated to receive an average of $2.3 billion per year in state-shared revenues, which is an increase of $844 million more than the average for the past four fiscal years. Bottom line, cities and towns will be receiving more money in state-shared revenues to offset these tax cuts.
Arizona is one of only two states in the country that imposes a residential rental tax on tenants, with 70 municipalities participating and charging between 1% and 4% each month on a lease. This rental tax can cost a family anywhere from $20 to $200 per month. Meanwhile, 65 cities and towns also levy a sales tax on food for home consumption, ranging from 1.5% to 4%. According to data from the USDA, a family of four on a low-cost grocery budget currently spends approximately $250 per week or $1,000 per month on food. When this tax is eliminated, a family on that same spending plan could save nearly $500 annually.
"These family-friendly tax cuts will allow our citizens who are living paycheck to paycheck have a little more wiggle room when paying their monthly bills," said President Warren Petersen. "Municipalities will not lose out on these revenues because the taxpayer will be spending what they get back, which in turn will be taxed via income and sales tax. Furthermore, with government already receiving record revenues, we are able to increase state-shared funding in order to support our cities and towns, despite Democrats pushing a sensationalized narrative that we will be 'defunding the police.' We will in fact do the exact opposite, while providing relief to taxpayers in the midst of a recession. Republican policies work for all Arizonans."
For more information, contact:
Director of Communications | Arizona State Senate Republican Caucus