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Lawmakers Being Banned from Ever Taxing Services

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Realtors formally launched their bid to have voters ban Arizona lawmakers from ever taxing services, even if legislators also reduced or eliminated taxes on other necessities or said the state needed the revenues.


Over 400,000 signatures have been submitted by the Arizona Association of Realtors Tuesday on petitions to put a measure on the November to prohibit a state sales tax on services. It would cover everything from their own services to barbers, medical care, lobbying services and weight-loss centers.


There is a purpose for doing so, it is to protect senior citizens and the poor from new taxes that a future legislature might impose, said Holly Mabery, a Prescott real estate agent who chairs the effort.


But Mabery didn’t dispute that if the ballot measure will be approved, that would prevent lawmakers from revamping taxes in a way that might have more benefit to people on fixed incomes.


For example, people living in Arizona now pay taxes to purchase school supplies, clothing, over-the-counter medications and adult diapers. Right now, which means with this current law, lawmakers could opt to make those purchases tax-exempt, making up any lost revenues by taxing selected services.


Or they could expand the list of what’s taxable to include services and reduce the overall state sales tax rate from its current 5.6%.


This initiative would block lawmakers from taxing not just basic services like medical care but also accounting, advertising, public relations, travel arrangements, nail salons, portfolio management and investment advice.


“The way we look at it, we want to draw a line in the sand that will absolutely protect Arizona taxpayers,” Mabery said.


Asked about the taxes now imposed on items routinely purchased by the poor and the elderly, she responded, “That’s not what we’re talking about.”


R-Chandler, the House Speaker of J.D. Mesnard, said Tuesday that, from a policy standpoint, he’s never been a fan of sales taxes on services. But it’s not that simple, he added.


Mabery said there’s no guarantee that any action by Arizona lawmakers would be revenue-neutral, having new taxes on services replace the levy on certain products. She said the initiative also protects against adding services to the list of what’s taxable to generate more dollars.


Mabery there are politicians in Arizona who have said they want to produce more revenues by expanding the list of what’s taxable.


That includes state Sen. Steve Farley, D-Tucson, who now is running for governor. Farley has pushed to expand what’s taxable to generate funding for education. Fellow Democrat David Garcia, also in the gubernatorial hunt, also has said the state needs to review what is now exempt from sales taxes.


Republican gubernatorial hopeful Ken Bennett also has mentioned the idea of taxing services but in the context of making the state less dependent on income taxes.


There already are some constraints on the ability of lawmakers to raise taxes.


The measure will be on the ballot if the Secretary of State’s Office determines that at least 225,963 of the signatures are valid.

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