Aside from aligning Arizona statute with that of 46 other states, the legislation will dramatically simplify the state sales tax system. It will do so by allowing businesses to remit their taxes to one location, be subjected to only one audit and replace the complicated prime contracting tax system with one where contractors pay their sales tax on materials purchased at the point of sale.
Almost immediately after the Governor presented the TPT Simplification Task Force report in December, cities and other political subdivisions went into action to preserve the taxes they so desperately covet.
The League of Arizona Cities and Towns issued a “Legislative Alert” on the issue.
They claimed in that “alert’ that “municipalities would face serious threats to sales tax revenue and authority,” and sent their lobbyists off to the Capitol to fight to protect their “revenues.”
However, many of those same political subdivisions have worked in the same legislature, with the same lobbyists to prevent the generation of revenue.
They have fought the mining industry on the local, state, and national level using every trick in the book. While those political subdivisions don’t mind the revenue brought in by homebuilders, who produce less than steady employment in bust and boon cycles, they actively fight resist revenue brought by the steady and high paying mining jobs.
It is the proposed eliminate the construction sales tax, which would be replaced by a retail sales tax at the point-of-sale of construction materials, which has certain municipalities up in arms.
In the end these political subdivisions are paying lobbyists to prevent revenue, which would then fund infrastructure projects, which would then create the preferred construction revenue.
The League of Arizona Cities and is angry and claim that “the construction industry is seeking preferential treatment; giving it favor among all other business types,” and call the change a “classic example of picking winners and losers.”
The miners say that is exactly what the cities and towns are doing; picking winners and losers.
The League of Arizona Cities and Towns is angry, saying that the change “narrows the tax base,” but hard working miners say that “it is the cities and towns that are narrowing the tax base.”
Most miners say that they are willing to pay their fair share in taxes, but as one Sahuarita area miner put it, “I have a great job, and these guys are trying to prevent the same opportunity for my younger brothers and sisters. Nowhere can they make the money I make.”
The League of Arizona Cities and Towns is angry, they complaining that “rather than broadening the tax base which could produce lower rates, this is another special interest tax break that reduces total revenue to the state as well as local governments.”
However the miners say they desperately want to broaden the tax base and see lower rates. As a matter of fact, in 2011 the mining industry paid $212 million in business taxes to Arizona governments. Their employees paid $96 million in individual taxes
The League is angry that they “are expected to accept these changes with little or highly questionable data.”
However, mining supporters say that the public does not know to what extent and at what expense the political subdivisions have gone to stop the revenue produced by mining.
The League is angry and claims that the proposed changes are an “attack on rural and small town Arizona.”
However, the people of small cities like Sahuarita say that political subdivisions like Tucson are trying to exert power and are launching attacks on mines that are miles away from them, while their communities have benefitted and flourished from the mining industry’s contribution to their tax base and growth.
The League is angry about the fact that the TPT “change will lead to huge budget losses and will send that revenue to urban Arizona or out of state.”
Of course the miners are saying the same thing about the opposition to the mines as they look for friendlier territory in South America.
“The residents of Sahuarita know firsthand what the property taxes paid by mines have done to improve and benefit our community. Other communities should have the same opportunity. The taxes the mines pay got into the state’s coffers; everyone benefits,” says on Southern Arizona mine supporter.
According to the L. William Seidman Research Institute, at the W. P. Carey School of Business, at ASU, In total, the mining companies and their employees pay to Arizona state and local governments $27,200 per worker. This is more than four times as much as is paid by the average Arizona business and its workers.
Other findings:
•Mining in Arizona serves not only to increase the absolute size of the state’s economy but to raise the average standard of living of its residents. The average labor income of all employees directly and indirectly supported by the mining industry is $65,000. This is significantly higher than $47,000, the average labor income of all Arizona workers.
•Because the provision of state and local government services is heavily tied to population, it is useful to compare the taxes paid per employee by an industry with the statewide ratio of total taxes to total employment.
Industries with per employee tax contributions that exceed the statewide average are likely to be making a net fiscal contribution to the state. The companies and their employees pay in taxes an amount that exceeds the value of the services they receive, with the difference serving to subsidize the provision of public services to other residents of the state.
•The business taxes paid by Arizona mining companies average out to $18,700 per employee. This compares with an average of $3,100 per worker paid in business taxes by all businesses in the state.
•Because of their relatively high compensation, the individual taxes paid by mining company employees are also higher than the statewide average. Individual taxes paid by mining employees are estimated to be $8,500 per worker. This compares with a statewide figure of $3,300 per worker.
A committee amendment, sponsored by Representative J.D. Mesnard (R-Dist. 17), helps relieve some of the concerns of growing municipalities by ensuring that state construction sales tax revenues are shared with cities and counties based on construction growth.
