Dec 23, 2012 2:05 PM by Associated Press

Cities oppose changes to construction sales tax

PHOENIX (AP) - Arizona's cities and towns are worried a proposal to change how sales taxes are collected from construction projects will severely cut the amount they receive from new building.

The reforms would have contractors pay sales taxes when they buy materials. That's a big change from the current system that assesses sales taxes on a percentage of the project's value.

The Arizona Republic reports the League of Arizona Cities and Towns estimates cities could lose $168 million a year. That's because sales taxes that now go to municipalities where a project is built could instead be collected where construction materials are actually sold.

A task force established by Gov. Jan Brewer to simplify the state's sales-tax system made the proposal. Any change requires action by the state Legislature.


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