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Pew Law Center Blog
April 16, 2012 Lawrence 'D' Pew

Arizona’s High Sales Taxes

Do you believe your city’s sales tax is too high? If you’re living or working in Glendale, Mesa, Phoenix, or Tucson, then you’re right. These four Arizona municipalities rank among the top 10 sales tax charging cities in the nation. Not the best news for area residents and business owners, as high sales tax rates negatively affect commerce in subtle and not so subtle ways.

Over the AZ Sales Tax Top

According to the Tax Foundation, Washington, DC, seven Arizona municipalities are among the top 16 highest sales tax charging cities. The major U.S. cities in the report include those U.S. Census municipalities with a population of more than 200,000.

Here are the top 16 cities with the highest combined local sales tax (state plus city tax):

Birmingham, AL – 10.0%

Montgomery, AL – 10.0%

Chicago, IL – 9.5%

Glendale, AZ – 9.5%

Seattle, WA – 9.5%

Phoenix, AZ – 9.3%

Memphis, TN – 9.3%

Nashville, TN – 9.25%

Tucson, AZ – 9.1%

Mesa, AZ – 9.05%

Baton Rouge, LA – 9.0%

New Orleans, LA – 9.0%

Scottsdale, AZ – 8.95%

New York, NY – 8.875%

Chandler, AZ – 8.8%

Gilbert, AZ – 8.8%

The total sales tax rate for Arizona cities begins with the state’s 6.6% rate. Add to that the city sales tax for a total rate. Among the top 16, only Tennessee has a higher state sales tax (7.0%) than Arizona.

Tax Avoidance – Buying Goods Elsewhere

The imposition of excessive sales taxes inhibits and sometimes interferes with the ability of area businesses to compete with those businesses purposefully located just outside the city limits.

The higher the cost of the goods (such as vehicles, motor homes, and boats), the more likely the potential buyer will seek to buy them where the sales tax is less. Take a new 2012 Chevy Volt, for example, that retails at the dealership for $43,000. If the vehicle is purchased in Glendale, then 9.5% sales tax adds another $4,085 to the cost. If the identical Volt is purchased in an unincorporated community like Oracle in Pinal County, then the total sales tax would be 6.6% for only $2,838. That represents a savings of $1,247, certainly enough of a difference to drive the purchaser away from the City of Glendale.

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