Fiscal Impact of TPT Contracting Simplification: Less Revenue for State and Most Municipalities

March 14, 2013

One of the priorities for Governor Jan Brewer is simplifying Arizona’s complex transaction privilege tax system, including as it pertains to contracting, as most states tax contractors at the point of purchase.  Because Arizona is a growth state, many communities heavily rely on revenue from contractors to pay for growth and general administrative expenses and prioritized capital projects.

Tax simplification is an important step to make the state eligible for added internet revenues.  If Congress enacts enabling legislation the state will be expected to make uniform its tax base. It’s also expected that the state will need to ease the administrative burden, so that on line retailers remit taxes to the Department of Revenue, and assist with tax calculation software if local tax rates differ between jurisdictions.