By BEX Staff for AZBEX
The Goldwater Institute has issued a warning to the Gilbert Town Council about a set of proposed taxes the Town says will fund local services and infrastructure.
Local news outlets report Council is set to consider increases to the Town’s sales and bed taxes and the institution of a use tax for online purchases from vendors whose Arizona sales total less than $100K/year. The measure is on the agenda for Oct. 22.
Gilbert plans to use the tax revenue to fund part of more than $700M in planned costs for public safety and parks and recreation projects.
The plan under consideration would raise the sales tax from 1.5% to 2% and the bed tax from 2.8% to 5%. The use tax would be set at 2%. Officials claim the rates are similar to those charged in other Valley cities and comply with the Arizona Constitution and state law.
Goldwater, however, asserts in its letter the plan violates the Constitution’s prohibition on services performed in the state, which was approved by voters in 2018. Article 9, Section 25 bars governments from implementing new taxes or raising tax rates that were in place at the end of 2017 for services performed in the state.
Gilbert officials have categorized Goldwater’s assertions as misleading and incorrect. In a statement, they said, “…Goldwater Institute’s claim that the proposed increase for sales tax on goods and use tax on the purchase of goods made online somehow constitutes an unconstitutional tax on a service is plainly wrong.”
Goldwater has also raised questions as to the “critical” nature of the projects to be funded and noted they include pickleball courts, splash pads and a “statement” bridge. Gilbert has denied the inclusion of a “statement” bridge and refers people to its website for project details.
Projects on Gilbert’s list include the expansion of the Public Safety Center, a crime victims’ Advocacy Center, a crime lab, rebuilding Fire Station 4, remodeling other fire stations and building a new police substation in the San Tan area.
The parks and recreation components are intended to manage the Town’s shortage of available park space and recreation programming compared with other cities and include the Freestone Park Pickleball Complex, Gilbert Regional Park Phases 2 and 3, and other projects.
Gilbert officials say the tax increases are intended to distribute financial burdens “equitably.”
For its part, the Goldwater Institute says, “…The burden of the tax increases will fall hardest on Gilbert residents who, along with area businesses and visitors, must actually pay them.
“They’re also illegal under the Arizona Constitution. The state constitution does not allow any new taxes or tax increases on ‘services’—a broad term that encompasses many types of businesses that do not produce tangible goods, including hospitality businesses.”
Goldwater representatives said the Institute will weigh all its options if the Town Council implements the tax changes.