In a June 22 letter in The Times, Stanley De Passos, who owns a Fountain Hills business, recommended the Town reduce its retail sales tax rate, noting the Town’s rate of 2.9% versus Mesa’s 2% and Scottsdale’s 1.75%. Mr. De Passos stated, in part, “any lost tax revenue can be offset by increased in-town spending.”

For each $100 purchase, buying in Mesa saves 90 cents in sales tax; buying in Scottsdale saves $1.15 in sales tax. For the analysis I ran, I used 25 miles per gallon, either $4/gallon or $6/gallon gas, and a round-trip from Fountain Hills Blvd. and Palisades to the Riverview Mall in Mesa, Frank Lloyd Wright and the 101; and Shea and 90th St.

At $6/gallon gas, a resident would have to spend – each trip – $1,029 in Mesa or $459/$538 in Scottsdale, depending upon location, just to break even on the cost of the gas for the round-trip versus the higher sales tax locally. At $4/gallon gas, those same numbers are $686 for Mesa or $306/$358 for Scottsdale locations. These numbers include only the cost of the gas, not the cost of oil, tires, wear and tear on the vehicle, etc.

There are many reasons a resident might choose to buy outside of Fountain Hills. One is simply the availability of the good/service/entertainment (e.g., no movie theatre here). Other reasons might be price and/or the selection available.

I do not believe residents choose to buy outside of Fountain Hills solely because of the higher sales tax. Perhaps some residents do that but, based on the analysis, it would rarely make economic sense to do so, even before taking into account the additional time spent to drive to those locations (54 minutes round-trip to Mesa; 32 or 40 minutes round-trip to Scottsdale, depending upon the location).