An Online Tax Cut Would Create A Nine-Figure Hole In Arizona

Not long ago, Arizona had to sell its state Capitol just to pay everyday bills.

It was the depth of the Great Recession, and lawmakers and the governor had few options other than cutting services, sweeping funds, selling state buildings and shifting costs to local governments.

As the economy improved, the state began to restore some services. But the Legislature to this day takes precious resources from cities, towns and counties to help cover its bills.

Bill would treat online sales differently

Even though the state still relies on a number of gimmicks to balance its budget, the Legislature is now considering a devastating revenue cut that impacts not only the state but local governments.

As it stands today, customers who purchase digital goods over the internet pay the customary sales tax assessed by the state and other entities. If you paid a sales tax when you rented a video at Blockbuster, you still pay the same sales tax when you stream Netflix on your computer.

Technology has improved to make it easier to deliver goods straight to your computer or television. And the state’s tax code treats those transactions the same as if you bought a CD or a package of software goods.

Some lawmakers want to change that – with serious consequences for state and local budgets. Senate Bill 1392 and its companion bill House Bill 2479 threaten to significantly change what is considered a taxable transaction.


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