By Beth Duckett
The Arizona Republic
Arizona municipalities are on edge about a proposal to change the way Arizona taxes construction materials, saying it poses a threat to city revenue.
The reform would charge sales tax on raw materials that contractors purchase at checkout rather than the existing system, which allows the state and cities to tax the final price of the project.
For cities and towns where construction activity is on the rebound, the reform could mean a shift in revenue to areas where contracting suppliers are abundant, instead of where the actual construction occurs.
The League of Arizona Cities and Towns has estimated Arizona cities could lose $168 million a year if there is a shift to paying for construction materials at the point of sales.
The potential revenue from construction-related taxes helps pay for crucial city services.
