At the Town Council’s meeting on June 6, Councilman Allen Skillicorn asked that at the next meeting (June 20) the council consider suspending the sales tax on food for home consumption for the month of July.

Skillicorn has himself estimated this to be about $138,000 in revenue for the Town. He did not have the support of two additional council members to bring the item back for consideration. Skillicorn said he felt this was a good plan to relieve some of the financial stress on residents due to inflation.

Town Finance Director David Pock has prepared an explanation as to why the proposal is not practical, or even legal from the point of view of state statute.

“The short answer is that that TPT (transition privilege tax) cannot be temporarily suspended,” Pock wrote in a memo. “Arizona Revised Statutes, the Department of Revenue, and the Model City Tax Code do not have provisions for temporarily suspending the collection of TPT for a specific business code. In other words, TPT is not like a ‘light switch’ that can be turned off and on at will. This is primarily because the Town must provide adequate notice to taxing entities and businesses (who are responsible for collecting and passing along sales tax).

“For this reason, there is a detailed, extensive process that the Town must follow to make any change to its TPT rate, along with a few key practical challenges.”

Pock has outlined the challenges he sees with regard to this proposal.

*Arizona Revised Statutes require any change to the Town’s adopted Tax Code be approved by the Municipal Tax Code Commission prior to approval by Council.

*Changes to any TPT rate are required to be posted on the Town’s website 60 days before final adoption by the Council.

*Notice of Public Hearing must be published 15 days prior to the Public Hearing being held to discuss and approve the change.

*The Ordinance approving the change must be sent to the Department of Revenue within 10 days of adoption.

*The effective date of the change can be no less than 60 days after the adoption of the Ordinance and should be the first day of a month.

*The posting and effective date requirements alone would make this a four-month process, and the same process would be necessary to reinstate the previous rate. This would result in losing at least five months (one month for the suspension and four months getting it reinstated) of TPT revenue from this business code. Based on last fiscal year’s monthly average, this would be around $780K.

*Each retailer that sells food for home consumption (grocery stores, Target, convenience stores, etc.) would have to update their point-of-sale system to remove the tax rate and repeat that process to put it back in 30 days later.

Because the proposal was not on the council agenda for discussion this information could not be outlined at the meeting.