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Luke Knipe

What types of sales get taxed by the City of Tucson?

City News, Data By November 13, 2017 No Comments

Transaction privilege taxes in Arizona—commonly referred to as “sales tax”—are deceptively complex. Politicians and reporters tend to treat them as a single tax, levied on most sale transactions that occur in a given jurisdiction. (Like the City of Tucson.) But the truth is considerably more complicated.

Arizona’s cities and towns tax a number of different business activities at a number of different rates. Some uniformity among the categories exists, thanks to the Model City Tax Code—a system of taxing rules maintained by a state commission. (I explained this in a bit more detail in my previous post about how Tucson’s sales taxes compare to other Arizona cities and towns.)

The pie chart below shows all the different business activities that comprised the approximately $219M in sales taxes collected by the City of Tucson in fiscal 2017. As you can see, about half comes from retail sales—a category that includes the sale of most over-the-counter items, excluding groceries.

But other types of activity contribute noteworthy shares, too. Restaurants and bars—the second-largest category—accounted for about $23.4M of Tucson’s sales tax revenue, or about 10 percent of the total.

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Tucson’s Mayor and Council: a timeline from 1960 to today

City News, Data, History Lesson By October 30, 2017 No Comments

Here is an interactive timeline chart showing Tucson’s mayor and council membership dating back to 1960. The colors indicate their political parties—blue shades for Democrats, red for Republicans. If you hover your mouse over one of the timeline bars, the chart will display additional information about that official’s time in office. To view a bigger version of the chart in a separate window, click here.

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How Tucson’s sales taxes stack up against other Arizona cities and towns

City News, Data By October 23, 2017 No Comments

Image courtesy of 401kcalculator.org.

In Tucson the subject of city sales tax tends to invite oversimplification. Reporters and politicians talk about it as though it were a single tax on most transactions that take place in the city, and perhaps most people think of it that way. The truth is considerably more complex.

The City of Tucson levies separate, individually defined “transaction privilege” taxes on more than 20 types of transactions, as do most other cities in Arizona. Most of these are taxed at the familiar rate of 2.5 cents per dollar, because our city charter caps them at that amount. (This cap was increased by a half cent on July 1 of this year due to voters’ approval of a temporary five-year increase.) But certain business types—like utilities and hotels—have always been excluded from that cap, allowing them to be taxed at higher rates. Other items, for various reasons, aren’t taxed at all.

Advertising, for example, is not taxed by Tucson although it is taxed by most other Arizona cities and towns. Neither is residential rental property or jet fuel. (None of the airports serving Tucson are inside its city limits.) Groceries are exempt from both Tucson’s sales tax and Arizona’s state sales tax, but are taxed by a number of other Arizona cities and towns—including Chandler, Scottsdale, and even South Tucson.

The different categories of taxable sales are established in the Model City Tax Code (MCTC)—a body of rules set by a state commission for the purpose of imposing uniformity on the taxing systems of Arizona’s cities and towns. The MCTC’s history dates back to the 1980s, when cities maintained their own tax codes. Businesses that operated in multiple cities found the varying tax codes onerous and sought state preemption of cities’ sales tax authority. Cities, naturally, weren’t willing to surrender their local control. The MCTC emerged as something of a compromise—affording cities control over tax rates and exemptions, while assuring something of a standardized system to business.

Arizona’s largest cities by population are Phoenix, Tucson, Mesa, Chandler, and Scottsdale. The table below shows each city’s tax rate for each type of transaction. At 2.5 cents per dollar spent, Tucson’s sales taxes are the highest among Arizona’s largest cities for most transaction categories. But they’re only higher than Phoenix’s by two tenths of a percent. And Phoenix taxes a number of things Tucson does not, including residential rental property.

Sales tax in Arizona’s five largest cities

(Tax amounts shown in cents per dollar, unless indicated otherwise.)

Transaction TypePhoenixTucsonMesaChandlerScottsdale
Advertising.51.751.51.65
Amusements2.32.51.751.51.65
Contracting - Prime2.32.51.751.51.65
Contracting -
Speculative Builders
2.32.51.751.51.65
Contracting - Owner Builder2.32.51.751.51.65
Job Printing2.32.51.751.51.65
Jet Fuel Sales (cents per gallon).00732.03.023.018
Manufactured Buildings2.32.51.751.51.65
Timbering and Other Extraction2.32.51.751.51.65
Severance - Metal Mining.1.1.1.1.1
Publication2.32.51.751.51.65
Hotels2.361.751.51.65
Bed Surtax (Additional Tax) (Per Night)$4 ea
RV Bed Surtax$2 ea
Hotel/Motel (Additional Tax)352.95
Residential Rental, Leasing, & Licensing for Use2.31.751.51.65
Commercial Rental, Leasing, & Licensing for Use2.32.51.751.51.65
Commercial Lease (Additional Tax).1
Rental Occupancy2.3
Rental, Leasing, & Licensing for Use of TPP2.32.51.751.51.65
Short-Term Motor Vehicle Rental (Additional Tax)2
Restaurant and Bars2.32.51.751.81.65
Retail Sales2.32.51.751.51.65
Retail Sales Food for Home Consumption1.51.65
Retail Sales (Single Item Portion over $10,000)2
MRRA Amount2.32.51.751.51.65
Communications4.72.51.752.751.65
Public Utility (Additional Communications)4.5
Transporting2.32.51.751.51.65
Utilities2.72.51.752.751.65
Public Utility (Additional Utility)4.5
Public Utility Right of Way1.5
Wastewater Removal Services2.71.751.65
Jet Fuel Use Tax (cents per gallon).00732.03.023.018
Use Tax Purchases2.32.51.751.51.45
Use Tax Purchases (Single Item Portion over $10,000)2
Use Tax From Inventory2.32.51.751.51.45

 

Sales tax in Pima County’s five incorporated areas

(Tax amounts shown in cents per dollar, unless indicated otherwise.)

Transaction TypeTucsonOro ValleyMaranaSahuaritaSouth Tucson
Advertising2.55.5
Amusements2.52.52.525.5
Contracting - Prime2.54445.5
Contracting - Speculative Builders2.54445.5
Contracting - Owner Builder2.54445.5
Job Printing2.52.52.525.5
Manufactured Buildings2.52.52.525.5
Timbering and Other Extraction2.52.52.522.5
Severance - Metal Mining.1.1.1.1.1
Publication2.52.5225.5
Hotels62.5223.5
Hotel/Motel (Additional Tax)6222
Bed Surtax (Additional Tax) (Per Night)$4 ea
RV Bed Surtax (Additional Tax) (Per Night)
$2 ea
Residential Rental, Leasing, & Licensing for Use22.5
Commercial Rental, Leasing, & Licensing for Use2.522.5
Commercial Lease (Additional Tax)4
Rental Occupancy22.5
Commercial Rental, Leasing, & Licensing for Use2.5
Rental, Leasing, & Licensing for Use of TPP2.52.52.526.5
Restaurant and Bars2.52.52.525.5
Retail Sales2.52.52.524.5
Retail Sales Food for Home Consumption1.5
Retail Sales (Single Item Portion over $5,000)2
MRRA Amount2.52.52.524.5
Communications2.54.525
Public Utility (Additional Communications)4.5
Transporting2.52.52.525.5
Utilities2.544.525
Public Utility (Additional Utility)4.5
Public Utility Right of Way1.5
Use Tax Purchases2.52.5
Use Tax Purchases (Single Item Portion over $5,000)2
Use Tax From Inventory2.52.5
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Winterhaven’s special deal for twice-weekly trash pickup not authorized in city code

City News By October 16, 2017 No Comments
A city trash container in Winterhaven.

A City of Tucson trash container awaits pickup on North Christmas Ave. on Friday, Oct. 12, 2017. Winterhaven residents, unlike other Tucson residents, get two curbside trash pickups each week.

A number of features set Winterhaven apart from other Tucson neighborhoods—most famously its holiday festival of lights. But its lush green landscapes are also atypical for Tucson—an anachronism made possible by the Winterhaven Water and Development Company (WWDC), the resident-owned water cooperative that nourishes its members’ lawns with cheap groundwater.

Winterhaven residents get a special deal on their garbage service too, thanks to an unusual arrangement between the WWCD and the City of Tucson. While most homes in the city receive curbside trash pickup once per week, Winterhaven’s trash is collected twice weekly—every Monday and Thursday. And while city residents outside of Winterhaven receive two brush and bulky pickups per year, Winterhaven residents get one each month, according to documents provided by the city’s Environmental Services department in response to a public records request.

Winterhaven residents pay the same rates as other city customers for the regular level of trash service—a tiered system that charges $15, $16, or $16.75 per month, depending on container size. This includes once-weekly trash pickups, plus two brush and bulky pickups per year. The additional weekly pickups, plus the additional monthly brush and bulky pickups, are paid for by the the WWDC on a monthly basis, according to City of Tucson spokesperson Lane Mandle.

The WWDC passes the city’s charge for the extra service onto its customers through its own billing system.

Mandle said the WWDC has been billed $2,052 per month for the additional service since 2010 and that city records show 270 pickup locations—amounts that work out to $7.60 per month per location. The city billed WWDC for lower amounts prior to 2010, according to Mandle. WWDC was billed $1,755 per month between 2004 and 2008. The rate was increased to about $1,841 per month in 2009, then to the current monthly rate of $2,052 in 2010, she said.

Fee schedules for city trash collection services are set by Mayor and Council, and these appear in Chapter 15 of the Tucson City Code. But the city’s fee schedules do not appear to authorize the rates being charged to WWDC.

Asked about the basis for WWDC’s special rate, Mandle said “it’s based on a tonnage,” an answer echoed by Environmental Services spokesperson Cristina Polsgrove when asked the same question. Neither could provide the per-ton rate upon which the monthly charge is based, although Polsgrove provided a document from 2008 suggesting indicating that about 82 tons of refuse and 29 tons of brush and bulky material were collected during that year.

No per-ton rate appears in either the residential or commercial collection fee schedule. The latter authorizes additional weekly refuse collection for $25 per pickup per customer, and special brush and bulky pickups of up to 10 cubic yards for $55 per event.

Neither Mandle nor Polsgrove could say whether the amount billed to the WWDC reflects the cost of service in providing weekly refuse collection and monthly brush and bulky collection for the neighborhood’s 270 homes, though Polsgrove noted that the arrangement dates back to before the city’s Environmental Services department became an enterprise fund in 2004.

In the terminology of municipal government, an enterprise fund is one that allows all of a service’s expenses to be recovered by user fees, making the service self-sustaining and not dependent on tax revenue. Environmental Services and Tucson Water are both enterprise funds.

Because Environmental Services is an enterprise fund, if the expense of providing Winterhaven’s additional service is not covered by the amount billed to WWDC, it must be absorbed by other city Environmental Services customers.

Polsgrove noted that the regular monthly fees for residential customers include more than just refuse collection. Residents also receive weekly recycling collection, twice-annual brush and bulky collection, household hazardous waste disposal, and a number of other services.

Requests via phone and email to the WWDC for an interview were not answered.

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