I came across a short report issued by the Morrison Institute for Public Policy at Arizona State University entitled, "Taxing Services: Arizona's Untapped Revenue Resource" issued in February 2011. It points out, as others have also pointed out, that there are equity reasons for broadening the sales tax to include personal services. It also notes that such expansion would also modernize the sales tax to reflect today's consumption and products. It states:
"However, if ever Arizonans faced a time where necessity should drive invention, this is it. Further, expanding the tax to consumer services would not only provide critical revenue, it would also more accurately reflect the current economy and increase predictability and responsiveness of the tax system — two key components of successful revenue systems."
The report also notes that taxing services is just one aspect of the total tax system that needs to be reviewed.
For more information on modernizing the sales tax to reflect today's ways of living, please see my prior reports and op eds - here. Broadening the base would help the sales tax to better meet principles of good tax policy and modernize this 1920's/1930's Depression-era tax. And ... the high sales tax rates can be lowered, further improving the tax system.
What do you think?
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