As ATR predicted three years ago when Arizona Gov. Jan Brewer first proposed her “temporary” billion dollar per year sales tax hike, there would be an effort to extend it, or make it permanent before the sunset date. Fast forward to today and we have Proposition 204, AKA the “Quality Education and Jobs Act,” on the November 6^th Arizona ballot. Prop. 204 would make Gov. Brewer’s sales tax hike permanent. What advocates for Prop. 204 fail to realize is that maintaining such a high sales tax rate serves only to hurt businesses and diminish jobs for Arizona residents.

Arizona’s 6.6 percent sales tax is currently the ninth highest in the country.  When factoring in the average local sales tax rate, Arizona has second highest sales tax burden in the nation at 9.12 percent. If the Prop 204 passes and the sales tax increase is made permanent, small businesses in Arizona will be hit the hardest. ATR recently summarized for the NRO a 2004 Pricewaterhouse Coopers survey that was the first national measure of retailers’ sales tax compliance costs:

The report found that retailers with less than $1,000,000 in annual sales were burdened with sales tax compliance costs in excess of 13 percent of sales tax collected. Meanwhile, the big guys — retailers with income between $1,000,000 and $10,000,000 — had average compliance costs of less than six percent. The really big boys, retailers with more than $10,000,000 in sales, had compliance costs that were less than three percent on average.

ATR encourages Arizona residents to vote No on Prop. 204. For a list of ATR’s recommendations for ballot measures that will be decided on by voters from coast to coast next week, click here.