FOR CAUCUS & FLOOR ACTION

 

REVISED

 

ARIZONA STATE SENATE

RESEARCH STAFF

 

DENISSE GEE

LEGISLATIVE  RESEARCH ANALYST

FINANCE COMMITTEE

Telephone: (602) 542-3171

Facsimile: (602) 542-7833

 

TO:                  MEMBERS OF THE SENATE

                                               

DATE:             February 28, 2001

 

SUBJECT:       Strike Everything Amendment to S.B. 1231 (sales tax holiday; school items)

                                                                                                                                                           

           

 

Purpose

 

            Exempts from the transaction privilege and use taxation 50 percent of the gross proceeds or purchase price from the sale or purchase of tangible personal property to or by a school district or public school in a school district. 

 

Background

 

            In Arizona, transaction privilege tax (TPT) is levied upon the gross receipts or gross income received from a taxable business activity.  The tax is the liability of the business or seller, but may be passed through to the consumer or purchaser.  Purchases made outside of Arizona and then brought into the state are subject to use taxation.  Use taxation is applied to the storage, use or consumption of tangible personal property in this state that has not been subject to an equivalent excise tax by another state.

 

            Currently, school districts and public schools in a district are subject to TPT and use taxation.  Identical legislation has been introduced in past legislative sessions and representatives of Peoria School District had then indicated that current taxation places a significant burden on the school district. 

 

            The strike everything amendment to S.B. 1231 exempts school districts and public schools in a district from 50 percent of the TPT and use taxation. This exemption is similar to the current deduction for sales to the federal government. 

 

Provisions

 

1.      Deducts, from the retail classification of TPT, 50 percent of the gross proceeds from the sale of tangible personal property made directly to a school district or a public school in a school district.

 

2.      Exempts, from use taxation, 50 percent of the purchase price or sales price of tangible personal property purchased directly by a school district or public school in a school district.

 

3.      Makes technical and conforming changes.

 

4.      Provides for an effective date of September 1, 2002.

 

Amendments Adopted by Committee

 

Adopted the strike everything amendment.

 

Senate Action

 

FIN                  2/26/01            DPA/SE           5-3-0-0

 

DG/jas