PHOENIX — The nation’s sixth-largest city is ready to begin phasing out an emergency sales tax on food that was added in 2010 to address a massive budget deficit.
While concerns about cuts to services delayed efforts to get rid of the 2 cents-per-dollar tax, leaders said the city is prepared to make up for the lost revenue.
Councilman Sal DiCiccio, who voted against the tax, said it affects poorer people disproportionately because they spend a larger share of their income on food.
“What the public wants is the food tax gone, clearly, across the board,” he said.
The plan calls for cutting the sales tax to 1 cent per dollar as of Jan. 1 and then allowing the tax to sunset in 2015, as called for when the City Council approved it.
“I think it was a tax that had to be at the time,” Councilwoman Thelda Williams said. “I also think it’s time that we kept our word and we begin to reduce it and totally eliminate it on schedule, as the public was told.”
Facing a $277 million deficit on a budget of $1 billion, the city added the tax in early 2010 on staples such as milk, meat and vegetables. For a family of four that spends around $150 a week on groceries, it works out to an extra $150 a year.
Outgoing City Manager David Cavazos has said the Jan. 1 reduction would cost the city $33.4 million annually. In a memo, he suggested refinancing debt, streamlining operations and selling off extra land to make up for the revenue.
“If we could actually sell two or three of our properties, we could make up the funding that we need — or that gap that we need — to fund the rest of the food tax,” Councilman Michael Nowakowski said.
The City Council is holding public hearings as it prepares to vote on the plan next month. On a recent weekday, not one person attended hearings in central and north Phoenix.
Two Arizona State University economists questioned phasing out the tax without another stable source of revenue in its place.
Tom Rex, associate director of the Center for Competitiveness and Prosperity Research at the W.P. Carey School of Business’ L. William Seidman Research Institute, said selling land, for example, is a short-term fix.
“But the next time the economy goes bad, you’re just going to have to cut even deeper, and chances are you’re going to be cutting into services that you’re providing to the same set of people that are being benefited from not paying the tax,” he said.
Dennis Hoffman, a professor of economics at the W.P. Carey School of Business, said the City Council should focus on broadening the tax base rather than turning away from a food tax as being regressive. He said the city could offer low-income people a rebate on the food sales tax, for example.
“My simple point is: I don’t think we should be turning our backs on food taxes, purely on this simplistic notion of regressivity,” he said.
But DiCiccio said it’s time for the food sales tax to go.
“This has been controversial since 2010,” he said. “It’s time to get past that, and the only way to get past that is to start the gradual removal of the tax.”
- Stretches and exercises for carpal tunnel syndrome
- The best Major League ballparks have their own personality
- Comparing the best regular seasons: The '96 Bulls and '16 Warriors
- 3 Arizona road trips and the vehicles to get you there
- Colon cancer is preventable. Check these signs and symptoms to stay healthy.
- 6 of the biggest skin cancer myths
- Affordable small home makeover ideas
- Locals helping locals: 6 success stories you need to know about
- Sunscreen facts that could save your life
- 6 energy saving hacks for your home
- 5 tips for choosing a company to end your timeshare
- Overlooked water tips to save you money
- 5 of the most adored gentlemen in professional sports today
- The real danger of sitting at your desk
- Most surprising NBA playoff performances of the last 40 years
- 11 classic baseball movies you must see again
- Finally getting rid of fat: 3 methods that actually work
- 4 reasons cancer survivors should focus on food
- 5 spring cleaning spots everyone forgets
- 5 reasons to look forward to watching the D-backs this season
- Common virus attributed to spike in head and neck cancers
- 5 signs it’s time to end your timeshare ownership
- 3 most overlooked ways to keep your home healthy
- 6 ways the air in your home could be making you sick
- CrossFit dangers: 5 common injuries and how to deal with them
- Today's radiation treatments offer better success, fewer side effects
- Tips to make watching TV on the patio even better
- What really happens when you donate to a community college?
- Sun and skin cancer: Separating fact from fiction
- 5 critical lifestyle changes for a healthy colon