Councilwoman Peggy Neely's
Tatum Sun Times Column

May 2007

Shop Phoenix for a Better Community

Like most cities, the city of Phoenix collects a large portion of its budget through the privilege tax, also known as sales tax. The general city tax rate in Phoenix is 1.8 percent, which applies to retail, construction, printing, publishing, transportation, restaurants, bars and amusements, among other types of commerce. The city then uses these dollars to provide important city services such as police, fire, parks, libraries, senior centers and other amenities.

Without sales tax dollars, it would be impossible for the city to operate as well as it does with the sales tax dollars. For example, retail development in District 2 has brought in nearly $80 million over the past several years. Successful developments in northeast Phoenix, such as Kierland Commons, Westin Kierland Resort and Spa and Paradise Ridge auto mall and the JW Marriott and Desert Ridge Marketplace have generated the millions of dollars mentioned above. That dollar figure is guaranteed to increase with the addition of CityNorth and the newly-opened Scottsdale 101 Power Center.

In fact, nearly $80 million dollars is enough money to pay for: 800 police officers; operating costs for 40 fire stations; or maintenance of the entire city parks system. Simply put: sales tax dollars are the lifeblood of the city. Over 40 percent of the city’s general budget derives from the sales tax—nearly twice the second most common source, which is state-shared revenue. Once that money comes in, over 66 percent of it goes to police, courts, fire, streets and transit, and parks and libraries. As the fifth-largest city in the United States, we must give our residents options for shopping in Phoenix because when our residents shop in Phoenix, we keep the tax dollars for our city that provide the vital services mentioned above.

Often people ask, “Where do my tax dollars go?” Well, it depends on what you are spending your money on. For example, the city portion of the sales tax in Phoenix is 1.8 percent. If you are spending your money on retail, such as clothes, 1.2 percent goes to the general fund; .1 percent goes to Police and Fire departments, and our city’s block watch program; .1 percent goes to transit; and .4 percent goes to public safety enhancement. If you are spending your money in a restaurant or bar, the 1.8 percent is broken down differently to fund other projects and services. For more information on how your tax dollars work, visit phoenix.gov/plt.

Please keep this information in mind when you are determining where to do your shopping – for small or large purchases. When you shop in Phoenix, those sales tax dollars stay in Phoenix to help keep our community safe, healthy, and educated with police and fire, parks and recreation, and libraries. Spending your hard-earned money in Phoenix is an investment in your community and your quality of life.

Phoenix City Councilwoman Peggy Neely represents District 2, which includes most of northeast Phoenix. She can be reached at 602-262-7445 or through e-mail at council.district.2@phoenix.gov.