Lawmakers pass bill eliminating rental tax for Arizonans

State lawmakers passed a bill that would ditch rental taxes in Arizona but critics say it would hurt essential services.
Published: Feb. 15, 2023 at 8:32 PM MST
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PHOENIX (3TV/CBS 5) -- Arizona lawmakers have passed a new bill to help people save money on rent as prices continue to increase. However, critics say it’s not thoroughly thought out and will cost more in the long run.

Rent prices across the state are sky-high, making it harder for Arizonans to get by. The average cost to rent a two-bedroom apartment in Phoenix is $1,575. Glendale is coming in at $1,650, and Mesa is right behind at $1,600. In Peoria, it is roughly $1,729. However, Chandler is coming in at a whopping almost $2,000.

To help ease this financial pain, SB 1184 would get rid of the rental tax. “We should not be targeting or harassing renters just because they are renters. Why should they pay this tax and other folks don’t? It’s terrible tax policy. In fact, it targets one group of people,” said Sen. Steve Kaiser, a Republican from Phoenix.

Republican leaders say the rental relief bill will save tenants in 70 Arizona cities and towns between $20 and $200 monthly. Phoenix, Scottsdale, Tempe, Peoria, Glendale, Gilbert and Goodyear are among the cities that currently have a rental tax. Meanwhile, Flagstaff and Tucson don’t.

Tom Belshe with the Arizona League of Cities and Towns says communities across the state rely on rental taxes to pay for important services, like police and fire departments, parks and recreation, and utilities. As a result, governments must find other ways to raise revenue if the rental tax goes away. “Cities and towns don’t tax just to tax. They tax to reach a certain dollar amount to cover the services that citizens expect and are used to getting. You make a change in one place, you’re going to feel it in another,” he explained.

Democrat Gov. Katie Hobbs was asked on Wednesday if she would sign the proposal when it hits her desk. She seemed to indicate it was more of a gimmick than a good policy. “These are not savings that are going to be passed on to renters and that’s a really key piece for me. It also includes funding that’s being allocated outside budget process and that is not something of where we want to be right now,” she said.

There are also concerns that the bill would help landlords more than renters since most people pay a flat monthly rate. However, lawmakers insist it wouldn’t be allowed under the proposal. The bill was mostly passed along party lines, with only one Democrat voting for it. Gov. Hobbs will have five days to sign it once it’s on her desk if she chooses.