Pinal County’s sales tax funding transportation projects is found illegal

Pinal County’s new sales tax funding transportation projects is deemed illegal by Arizona Tax Court as announced on Thursday, Aug. 2.

According to a press release, Proposition 417 that passed by a slim margin last November, allowed a sales tax to pay to be collected for infrastructure improvements and road construction.

However, Goldwater Institute sued, arguing that the new tax violated state law and created a confusing set of tax rules that would “ultimately hinder economic development in the county,” the release stated.

“Thanks to the Court’s decision, Pinal County taxpayers are the real winners today,” Goldwater Institute Vice President for Litigation Timothy Sandefur said in a prepared statement. “Had this sales tax gone forward, the damage to taxpayers’ wallets and to economic opportunity in Pinal County would have been immense. We applaud the Court for siding with taxpayers against this illegal tax.”

Pinal County is said to have maintained that the new tax applied only to retail sales below $10,000, meaning that the tax would fall disproportionately hard on the day-to-day purchases of lower-income citizens rather than expensive items like new cars and jewelry.

In March, Arizona Tax Court denied an injunction that would halt collection of the tax; as a result, the tax collection began as scheduled on April 1, the release detailed. Since the tax has been found to be illegal, Pinal County must refund the tax dollars already collected, which was put in an escrow account pending the lawsuit’s outcome.

The decision found that the county violated the law by telling voters it would impose the tax only on retail businesses despite state law not allowing it; and then changed its mind by telling state tax officials to collect the tax on all businesses in the county although voters didn’t approve the tax, the release said.

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