Four Arizona cities rank among the nation's top 10 municipalities for highest sales-tax levies, according to a new report.
Consumers in Glendale, Phoenix, Tucson and Mesa pay combined sales-tax rates in the 9 percent range, placing them among the top 10 in the nation, with Scottsdale, Chandler and Gilbert only slightly lower. Birmingham and Montgomery, both in Alabama, had the highest combined state and local sales-tax rates at 10 percent.
"Sales taxes in the United States are levied not only by state governments but also by city, county, Native American and special-district governments," according to the report, which focused on cities with 200,000 or more residents, by the Tax Foundation in Washington, D.C. "In many cases, these local sales taxes can have a profound impact on the total rate that consumers see at the checkout register."
Portland, Ore., and Anchorage, Alaska, tied for the lowest since neither city has a sales tax, along with no state sales tax.
The Tax Foundation cited sales taxes as a factor in the relative competitiveness of certain cities and states.
"While many factors influence business location and investment decisions, sales taxes are something within policymakers' control that can have immediate impacts," it wrote. "One gauge of competitiveness is how a city's sales-tax rate compares to its neighbors."
Kevin McCarthy, president of the Arizona Tax Research Association, said the study's findings aren't surprising.
"Arizona historically has rated high for sales-tax collections," he said.
One reason is that the state's basic sales-tax rate of 6.6 percent is on the high side, and so are levies from various cities here, he said.
Plus, relatively few types of activities are exempt or excluded from the sales tax here, so the base is broad. Of the three legs of the tax-collection stool, including property and income taxes, "the longest leg of the stool is from sales taxes," McCarthy said.
The Tax Foundation report noted that consumers often evade high-tax areas by shopping in lower-tax areas and that retailers often set up shop in lower-tax jurisdictions, especially along state borders. The report didn't account for sales-tax nuances such as groceries or other items that might be exempt.
While consumers pay sales taxes, McCarthy said businesses often face administrative difficulties complying with the regulations here, which can be a problem from the standpoint of economic competitiveness.