New proposals would deliver tax relief for businesses

Two proposals from state Sen. J.D. Mesnard, R-Chandler, that passed the Senate Finance Committee last week would give tax relief to businesses in this period of high inflation.  

Senate Bill 1263 would exempt all business personal property (BPP), or any property, other than real estate, from taxation in the state of Arizona.  

Under current statute, Arizona businesses are required to pay recurring property taxes every year for any equipment, supplies, or other property used for trade or business within their possession.  

“I view this as double taxation,” said Sen. Mesnard as he explained his bill. “People pay a sales tax when they purchase items. We make businesses pay personal property taxes when people do not.” 

Business community representatives agreed with Mesnard’s assessment. 

“This becomes a tax on honesty,” said Chad Heinrich, representing the National Federation of Independent Businesses “You could have, for example, two retail stores across the street from each other, both with similar property to the other. One decides to report their property, the other one doesn’t, maybe because they don’t know that they need to, and doesn’t report. [Those businesses] end up being on an unequal playing field.” 

Opponents of the bill voiced worries about the impact on revenues for counties and school districts that rely on property taxes.  

“The challenge has been that some of our communities are heavily reliant on the business personal property [taxes],” said Ryan Boyd, testifying on behalf of the Arizona Association of Counties. “We are very concerned that this would be a massive shift.”  

A second proposal, Senate Bill 1276, looks to accelerate tax reduction measures that were approved by the Legislature last year, so that the benefits of those policy changes can be felt sooner.  

“If you want to continue to compete in the region, this is the way that you do it,” Arizona Tax Research Association President Kevin McCarthy said. “We have improved, and we continue to need to make progress.”  

Supporters of both bills include the Arizona Chamber of Commerce & Industry, The Arizona Tax Research Association, The Arizona Chapter of NAIOP, the Commercial Real Estate Development Association, along with many others.

Abby McLain

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