Carefree Truth

Issue #280, October 21, 2013

 

 

 

Mayor David Schwan introduced Albert Holler, the new Town outside auditor and tax consultant, who gave a presentation to the Council on Use Tax.  Mr. Holler explained that sales taxes and use taxes are complimentary.  If sales tax is paid on a purchase, use tax does not apply.  The rate and exemptions are the same for both.

 

 

 

He said the original request for a state use tax came from car dealerships in the 1950s.  Increasing numbers of Arizona residents were going out of state to buy cars, since sales tax was not charged on interstate transactions.  This created a competitive disadvantage for the local dealerships.  A state use tax was implemented, and the use tax is collected when out of state cars are registered in Arizona.  

 

 

 

A local use tax applies when vendors sell goods to merchants because that would be considered as having a presence in that city or town.  It also applies to Internet transactions over $1,000, but does not apply to purchases by individuals of goods under $1,000.  There are 2 types of Internet vendors.  Companies that have a "bricks and mortar" presence in the state, as well as a sales website, are required to collect a use tax on their Internet sales.  Those that do not have a physical presence are not required to collect a use tax, but most voluntarily do so.  Mr. Holler stated that all the surrounding cities and towns have a use tax.  These include Fountain Hills, Cave Creek, Scottsdale, and Phoenix.

 

 

 

Councilman John Crane asked what the anticipated revenue would be should Carefree implement a use tax.  Mr. Holler replied that some small towns collect $100,000 a year.  Councilman Glenn Miller said, "Well, you do Cave Creek, right?  You're the independent outside auditor for Cave Creek?  They have a use tax, don't they?  What do they get?"  Mr. Holler replied that they told him it's approximately $150,000 annually, but said that the reporting information from the Department of Revenue is limited.  He agreed that, "It is substantial."  Councilman Miller responded, "We're losing out on it because we don't have that."  Mr. Holler agreed.  He said that most of the revenue would come from Internet sales by the big national retailers, should the Town decide to adopt a use tax.

 

 

 

The agenda item was for informational  purposes only, and no action was taken.         

 

 

 

http://www.youtube.com/watch?v=iqcanIfe5gQ

 

Lyn Hitchon

 

 

 

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