Arizona Republicans introduce bills to eliminate local grocery, rent taxes

PHOENIX — Arizona Senate Republicans have introduced two bills aimed at taxes on food and rent.

Senate Bill 1063 would eliminate municipal taxes on groceries, while SB1184 would do the same for rent payments.

There are no state taxes in Arizona on groceries or rent. About 70 municipalities levy a tax on monthly rent, while 65 local governments collect taxes on food for home consumption, according to a Senate Republican press release Monday.

Proponents of eliminating the taxes say consumers deserve the break while inflation is high and state and local governments are financially strong.

The state doesn’t tax food, and many large cities with diverse tax bases don’t either. But for small towns like Taylor, grocery taxes make up 35% of Transaction Privilege Tax revenue, Springerville 22%, Benson 20% etc. A $190m hit would hurt rural AZ. #HB2061 https://t.co/JnnegMoruo

— Arizona House Democrats (@AZHouseDems) January 18, 2023

Opponents worry the lost revenues could force small rural communities to cut funding from their public safety budget.

“These family-friendly tax cuts will allow our citizens who are living paycheck to paycheck have a little more wiggle room when paying their monthly bills,” Senate President Warren Petersen said in a the release.

“Municipalities will not lose out on these revenues because the taxpayer will be spending what they get back, which in turn will be taxed via income and sales tax.”

Republicans narrowly control both chambers of the Legislature, but they need unanimous support from their caucus to pass bills without any Democratic votes.

It’s unclear if Democratic Gov. Katie Hobbs would sign off on the bills if they make it to her desk.

During her State of the State address earlier this month, she said she wants to exempt diapers and feminine hygiene products from the state’s sales tax, but didn’t mention rent or grocery taxes.

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