Ballot Measure to Amend Arizona Constitution Prohibiting Taxation of Services

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A ballot measure was filed with the Secretary of State to amend Arizona’s Constitution to protect taxpayers from sales tax on services. The measure is supported by the Citizens for Fair Tax Policy, Arizona Retailers Association, and Arizona Association of Realtors. For the proposition to make it to the November ballot, at least 225,963 signatures are required by July 5, 2018.

According to the Citizens for Fair Tax Policy, if the amendment passes, sales taxes from professional services to haircuts would be banned. Currently, these services are not taxable and the amendment would put an end to efforts for new taxes. The Protect Arizona Taxpayers Act would not impact existing sales taxes on tangible goods, which could still be raised, modified, or extended.

Why Now?
Recently, a new sales tax on services was proposed in the Arizona Legislature. This year, Oklahoma and Illinois discussed taxing services, and North Carolina and Washington State started imposing new sales taxes on services.There are concerns that politicians often share ideas that may not benefit Arizona.

Other concerns involve economic and technology changes. Some tax revenues can decrease dramatically with less people purchasing goods in favor of services. For example, people may use Uber instead of purchasing a car.

According to the Arizona Department of Revenue, the following services are exempt from sales taxes:
Hospitals — $810.1 million
Doctors — $454.0 million
Legal — $184.9 million
Securities brokerage — $116.8 million
Auto repair and maintenance — $105.3 million
Accounting, tax prep, bookkeeping — $82.0 million
Travel arrangement and reservation — $69.9 million
Advertising, public relations — $41.2 million
Waste collection $39.0 million
Investment advice — $35.6 million
Technical and trade schools — $31.8 million
Child day care — $22.1 million
Beauty salons — $18.7 million
Chiropractors — $13.7 million
Parking lots and garages — $11.0 million
Death care services — $9.3 million
Pet care (not veterinary) — $3.5 million
Nail salons — $3.1 million
Barbers — $558,000
More information on the ballot measure can be found at the Secretary of State’s website and Protect Arizona Taxpayers.

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