Scottsdale vice mayor looks to abolish ‘regressive’ sales tax on groceries

The city of Scottsdale assesses a 1.65 percent sales tax on all grocery goods with within city limits. (Independent Newsmedia/Melissa Fittro)

The city of Scottsdale assesses a 1.65 percent sales tax on all grocery goods within city limits. (Independent Newsmedia/Melissa Fittro)

Scottsdale Vice Mayor David Smith says he is on a mission to abolish a local sales tax he deems regressive and a burden to the community’s most vulnerable population — the working poor and elderly.

Scottsdale City Council Tuesday on Jan. 26 voted 5-2 to take 1.1 percent of the 1.65 percent retail sales tax assessed on all grocery sales within city limits — a total of about 7.8 million this fiscal year — and funnel those dollars into the capital improvements budget forecast.

Scottsdale City Council members Virginia Korte and Linda Milhaven were the dissenting votes.

David Smith

David Smith

The entire 1.65 percent food tax will account for about $12 million in fiscal year 2016-17, Vice Mayor Smith contends.

Since 2004 the city of Scottsdale has been assessing a 1.65 percent sales tax on all grocery goods sold within city limits, but a tax on food was first assessed in 1958 through ordinance 50, city officials say. Until earlier this year, 1.1 percent was dedicated toward the General Fund while the remainder was divided into the city’s transportation and preserve funds, city leaders say.

Vice Mayor Smith claims human beings on average are taxed $48 a year for the privilege of buying groceries within Scottsdale city limits. His information is based on tax remits and the city population.

“Food taxes are considered by anyone who is an economist as the most regressive tax anyone can impose on their citizens,” he said in a March 14 phone interview. “You have to eat food — it hits the poorest of residents the hardest because food is typically a larger share of their disposable income.”

About 8 percent of Scottsdale’s population — 226,918 — lives beneath the federal poverty line, according to the 2010 Census. A gross annual income less than $23,350 for a family of four is the median poverty line in the 48 contiguous states, according to the Department of Health and Human Services.

“In Scottsdale, we consider ourselves an affluent community, but we do have people who struggle,” Vice Mayor Smith explained.

“For reference, I have pointed out that 50 percent of the people who live in Arizona do not pay a sales tax on food. Phoenix, Tucson, Mesa nor Surprise charge a food tax. The list goes on.”

Scottsdale Councilman Guy Phillips disagrees with the notion the city sales tax on food can be deemed “regressive.”

“I do not agree its regressive since its on food and the poor do not purchase more food than the rich,” he said in a March 16 statement. “To be regressive means it has to place more of a burden on one group than another.”

Councilman Phillips says property tax is far more burdensome on low-income residents rather than the current food tax.

Guy Phillips

Guy Phillips

“During the recession thousands of fixed-income elderly lost their homes due to tax liens,” he pointed out.  “They simply couldn’t pay the property tax imposed on them. No one ever lost their home because of a tax on food.”

Councilman Smith wants to champion for the poor by getting rid of the food tax, yet he wants to raise the property tax, which is obviously more of a burden to the poor and fixed income.”

Councilman Phillips says federal assistance exists for those struggling to put food on the table.

“Those who are on welfare have EBT cards, which helps cover their food expenses,” he said. “There is no federal program to help with property tax.”

While Councilman Phillips say he does not agree with the vice mayor’s stance on the tax itself, he is in favor of increasing allocations to the municipality’s capital improvement fund.

“I was surprised to hear Councilman Smith propose this, but since I have been trying to get the council to make policy on the CIP for years, I agreed to this proposal,” he said of his support for Councilman Smith’s proposal.

“Currently, we only put in 25 percent of construction tax, which is nowhere near enough to fund our projects.”

Vice Mayor Smith says he will continue to push to entirely phase out the food tax assessed in Scottsdale.

The Vista Del Camino Food Bank in fiscal year 2014-15 handed out 2,282 emergency food boxes to Scottsdale residents.

“Has it been increasing? Well, our Adopt-a-Family program is increasing every year,” said Eddie Durazo, Vista Del Camino human services representative in a March 15 phone interview. “We gave out fewer food boxes last fiscal year compared to the year before.”

The Vista Del Camino Community Center, 7700 E. Roosevelt St., serves as an outreach hub that aids residents and provides services ranging from job search assistance to emergency food boxes, city officials say.

“To receive a food box, all you need is to be a Scottsdale resident,” he said of the main criteria to seek assistance at Vista Del Camino. “We have been operating this food bank since 1973. There is a huge need for food here. If the food bank were to go away (in Scottsdale) that would be a big takeaway from people who need food here.”

Scottsdale City Council is expected to see a tentative budget proposal for fiscal year 2016-17 sometime in April, city officials say.

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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