The Phoenix City Council passed a new 2% tax on food on Tuesday February 2. The City passed the tax in an effort to avoid drastic budget cuts in City services including the police and fire departments. The City is proposing the layoff of about 400 police officers. Mayor Phil Gordon claims this tax will raise $50 million that can be used to finance the police and fire departments, among other city services. Items purchased with food stamps are exempt from the tax...
The newly imposed tax raises fairness and possibly even Constitutional issues. Let’s consider the case of three people buying food in the same store. The first lost his job and is working part time trying to get by. The second is a senior citizen squeaking by on a small monthly Social Security check. Both pay for their own food without any government assistance. Both purchase their groceries and pay the extra 2% in sales tax. The third makes their purchase with government food stamps and pays no taxes.
Now the first two pay the tax with their own money even though they may be in a significantly worse financial position than a person receiving government food stamps and probably Access as well. What incentive is there for them to tough it out? Why get taxed on your rice and beans when someone else is eating tax free meat? How is this fair?
This tax is arguably discriminatory against some of citizens in its application. The Supreme Court applies the “rational basis” test to most tax laws. The law just has to be rationally related to a legitimate state interest. However, the Courts grant less deference to a City ordinance than a law passed by a States’ Legistslature. A Constitutional lawyer can probably come up with some reasonable arguments against the tax.
The City claims that the tax is necessary to prevent layoffs in the police and fire departments. This is fear mongering designed to take attention away from the bloated City bureaucracies. The City can certainly make budgetary cuts without involving the police or fire departments. Any City official that has to target the police and fire departments first should find another line of work. Their overspending created this problem in the first place.
Some interesting budget facts can be found on the official web site of District 6 Councilman, Sal DiCiccio. DiCiccio discovered that the average cost of all city workers is $100,000 including benefits. He found that the average private sector compensation was around $54,100, in the Phoenix area. The City is spending twice as much on average than the private sector. DiCiccio wants the City to focus on core functions and basic services. He is opposed to a tax increase and the food tax in particular.
Mayor Gordon can certainly find areas to cut the City budget without laying off first responders from the police and fire departments. The Food Tax is bound to fail to achieve its stated goal. People will shop elsewhere. And for every person that avoids the 2% tax, the store loses 100% of that sale. Fewer sales equal less revenue. Less revenue equals less income to the City. Do the math. The only people who will buy there groceries in Phoenix are those with too much money to care and those too broke to go anywhere else.
Sources
phoenix.gov
azfamily.com
house.leg.state.mn
