The City of Phoenix is planning on raising taxes on businesses that provide services in order to pay for an alleged revenue shortfall. However, the Goldwater Institute (GI) sent Phoenix officials a letter on March 6 warning them that the Arizona Constitution does not allow any new taxes or tax increases on “services.” GI said the tax increase would “rais[e] the prices of services like construction, contracting, and lodging.”
Article IX, Section 25 of the Arizona Constitution provides, “The state, any county, city, town, municipal corporation, or other political subdivision of the state … shall not impose or increase any sales tax, transaction privilege tax, luxury tax, excise tax, use tax, or any other transaction-based tax, fee, stamp requirement or assessment on the privilege to engage in, or the gross receipts of sales or gross income derived from, any service performed in this state.”