Prop 100's Passage in Arizona Insitutes Divisive Sales Tax Hike

The passage of Prop 100 has led to the first ballot-initiated tax hike being put into effect as of June 1, 2010. The hike adds a 1% bump in sales taxes in Phoenix, as well as the rest of the Valley of the Sun. While some believe this tax hike will be a huge boost to Arizona's economy, opponents of the hike think it will lead to a depression in sales, hurting the Valley's businesses.

ReasonsProp 100 came into being as a result of the overwhelming need for additional funding in Arizona's schools. The sales tax implemented is projected to net the state $1 billion dollars a year in additional funding, according to Governor Jan Brewer. Two-thirds of the money raised will go to Arizona's primary and secondary schools, and the other third will be split between health and safety programs, according to Brewer. Due to Arizona's current budget crisis, the tax is a must to keep Arizona's schools going strong, according to its proponents.

Opposition

The passage of Prop 100 did not make everyone happy. Its spot on the ballot led to the formation of a group called Ax the Tax Arizona, which held rallies and used the internet to gather support for voting "No" on Prop 100. They think that the tax hike will slow spending in Arizona, as people won't be able to spend the extra money on goods. This sales depression, they believe, will outweigh the benefits of the tax.

Temporary Nature

The 1% sales tax imposed by the passage of Prop 100 is scheduled to last for three years. While projected to raise $1 billion a year, it will not be a complete fix for Arizona's budget problems. The gap between Arizona's spending and tax collection is roughly $2 billion a year.

While it is too early to tell whether the effect of Prop 100's passage will be a benefit to Arizona, one thing is for sure: its 1% tax hike is one of the most divisive issues in recent Arizona history.