The Tax Man Cometh; Sales Tax On Services Proposed

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In January we wrote an article about State Treasurer Dean Martin’s presentation to the Central Arizona Board of Realtors.

Treasurer Martin explained the perilous financial situation that Arizona was facing.

If you recall, he forecasted a $3 billion to $4 billion dollar deficit.

We are beginning to learn of the fix that some legislators are proposing and it sounds as though it is not a temporary fix until the economy recovers, but a new permanent tax.

Details are vague at this time, while the general outline is being quietly run up the flagpole to get a measure of the public’s tolerance for another taxing structure.

This tax may again, although indirectly, affect the price of housing not to mention many other services that remain untaxed.

This is a second try to increase your taxes.

Last year, through Proposition 100, the people of Arizona overwhelmingly told our Arizona government they did not want a transfer tax on housing and enacted a constitutional amendment to prevent such a tax from ever resurfacing.

As Ronald Reagan said in a debate, “There you go again …” and here we go again.

What is being kicked around is a sales tax on services.

For housing, it may mean a tax on professional services, title services, home inspections, wood infestation inspections, septic pumping, appraisals, homeowners insurance and the list could go on and on.

In addition, this time it will not just affect housing. This tax is being designed to include all services.

For example, if you get your hair cut, need a service call from a plumber, visit a physician, consult with an attorney, or use a pay toilet, your state elected officials may try to put a tax on it.

It is our understanding that only three states, Hawaii, South Dakota and New Mexico have as broad based a service tax as what is being kicked around our state capitol.

The other side of this type of tax is that it not only adds to the state bureaucracy, but may also force businesses to increase their prices to deal with the administrative costs of handling the paperwork that is associated with this type of tax.

Understand this tax is not etched in stone and may never happen, however, this is to alert you to what may be being considered. As we get more details, we will pass them along.

Ray Pugel is a designated broker for Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.

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