Senate Bill 1063 Proposal in Arizona

Senate Bill 1063 has passed and is on its way to the House for their vote. If passed in the house and approved by Governor Hobbs, the law would eliminate sales tax on food purchases from grocery stores. Proponents of the bill say it would benefit the working poor who must, of course, purchase food. Currently, some Arizona cities and towns like Nogales, Safford, Globe, etc. do charge tax on food items purchased in retail stores and altogether, over $161 million per year is collected. If SB 1063 passes, cities would no longer be allowed to charge that tax, which would create a gap in the cities’ revenue of up to 20%, depending on the municipality. Presumably, that gap would need to be made up by increasing other taxes, such as property tax, in order to pay for city services like 1st responders and parks and libraries.

A companion bill, SB 1167, which prohibited Arizona cities and towns from taxing residential rents has already been vetoed by the Governor. We’ll see what happens with the food tax.