(The Center Square) – The Town of Gilbert defended the legality of its sales tax increase proposal on Thursday despite opposition from the Goldwater Institute.
In a statement to The Center Square on Thursday, the town said that the proposals comply with the state constitution and law, and that the proposed “tax adjustments” have to do with “critical infrastructure needs.”
The Goldwater Institute specifically took issue with some of the proposals, including what a tax of services could imply.
“The Arizona Constitution is clear that any portion of the proposed tax that imposes or increases a tax on any service performed in the state is unconstitutional,” the conservative think tank wrote in a letter to the council. “This would include Gilbert’s proposed sales tax, bed tax, and may include the new use tax. Consequently, we urge the Town to disapprove the new proposed taxes or any proposed tax wherein it would violate the Arizona Constitution.”
However, the town argued in its statement that “the proposed increase in the bed tax also misconstrues the Arizona Constitution’s prohibition on tax increases for services.”
The institute also raised concern about a proposed tax for “online vendors who do less than $100,000 of sales in Arizona each year.”
“For example, Goldwater Institute’s claim that the proposed increase for sales tax on goods and use tax on the purchase of goods made online somehow constitutes an unconstitutional tax on a service is plainly wrong,” the town argued.
Some of the needs outlined for the proposal range from recreational infrastructure such as pickle ball courts and splash pads, as well as police and fire station proposals ranging from remodels to a crime lab.
The town council is expected to vote on the proposed hikes on Oct. 22, and it would go into effect at the beginning of 2025 if passed. All of the hikes are a proposed 0.5% increase from 1.5% to 2%, except for the “bed tax” for hotels and motels, which would go from 2.8% to 5%, according to the notice of intent.
“Local government officials are public servants who ought to represent the interests of the community—not violate their rights,” Goldwater Staff Attorney Stacy Skankey said in a statement.
