Will ‘sin tax’ replace food tax?

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by Catherine Holland

Video report by Kristine Harrington

Posted on September 14, 2011 at 7:20 AM

Updated Wednesday, Sep 14 at 9:09 PM

Poll:
Do you think "sin taxes" are a good idea?
Poll:
Should the food tax be repealed?

PHOENIX – The food tax was controversial when it when into effect last April, but it could be replaced by something even more contentious – “sin taxes.”

While nothing has been decided yet and there’s not even an official proposal on the table, the Phoenix City Council is exploring the possibility of implementing a sin tax to replace the revenue generated by the food tax when it expires or is rescinded.

The so-called sin taxes would apply to things like tobacco, tattoo parlors, strip clubs, liquor stores and the like.

Prompted by a massive budget deficit, the City Council approved the 2-percent food tax in February 2010. It kicked in on April 1, much to the dismay of many Phoenix residents. It’s set to expire in 2015 although the City Council could rescind it before then. That’s something many people want.

Opinions about the food tax have been decidedly split from the first discussion. It was originally pitched as a way to save the jobs of hundreds of police officers and firefighters. What did not sit well with Phoenicians, however, was the fact that city employees got raises totaling $30 million just a few months after that food tax was implemented.

Whether the food tax expires on its own or is repealed, the City Council says it needs to find a way to replace the estimated $50 million it generates yearly.

The idea for sin taxes was raised at Tuesday night’s City Council meeting during a discussion about potentially repealing the relatively unpopular food tax before it expires.

Phoenix Mayor Phil Gordon, who is wrapping up his final term in office, said he still supports the food tax but is open to exploring other options.

"You have to pay more for luxury items like cars and plane tickets and car rentals and things like that," said one woman. "Why not a a vice, something that you don't need?"

In addition to the sin taxes, the City Council is also looking at the possibility of taxing false calls to emergency personnel and electronic billboards.

Other council members, including Sal DiCiccio, who was against the food tax from the start, would rather focus on finding ways to reduce spending.

"This tax is wrong. It's the wrong direction for the city of Phoenix,” DiCiccio said about the food tax when it went into effect last year.

Wednesday morning, he said if the public gets involved, the food tax could be repealed by the end of the fiscal year in June. DiCiccio said there already are four votes against the food tax, including himself, newcomer Jim Waring, Bill Gates and Thelda Williams.

"The public was lied to from the beginning," DiCiccio told 3TV's Javier Soto, referring to how the food tax was presented to the public. "This scandal needs to come to an end."

As he is with the food tax, which mayoral candidate Wes Gullett says it not even necessary to the city budget, DiCiccio is against the potential sin taxes, afraid of where such taxes might lead.

"What they're going to do is, literally,  try to open the door to taxing the small-business owners," he said. DiCiccio believes the sin tax could give way to taxes on other services in other industries.

"That's literally an assault on the small-business owners," he continued.

At this point, no decisions have been made about the future of the food tax or the possibility of imposing sin taxes. Both issues are just in the discussion phase.

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