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Initiative aims to ban tax on property sales, transfers

A proposed constitutional change to ban taxes on property sales or transfers was filed Jan. 30 with the Arizona Secretary of State’s Office.

The type of tax is not currently used, and the “No New Home Tax” initiative is intended to keep it that way, said Steve Roman, a partner with Hamilton, Gullett, Davis & Roman, a firm hired to handle the campaign led by the Arizona Association of Realtors.

“It’s one idea that continues to be brought up and we clearly agree that this is a bad idea,” he said, referring to transfer taxes. “This initiative would prevent it from ever being brought up in the future.”

Ken Strobeck, executive director of the League of Arizona Cities and Towns, said he would not expect the measure to have a noticeable impact, and that proponents would be “collecting taxes for something that doesn’t exist.”

But he is critical of efforts that skip the Legislature by way of the initiative process.

“I think it is inappropriate to make tax policy by initiative,” Strobeck said. “Our elected officials take care of making decisions that people support.”

The League of Arizona Cities and Towns has not lobbied for the sales tax method targeted by the No New Home Tax initiative, but the group is primarily concerned with shrinking sales tax revenues and threats by state legislators to shared tax revenues received by local governments from the state, he said.

Tom Farley, a lobbyist with the Arizona Association of Realtors, did not immediately return calls.

As of 2006, the Federation of Tax Administrators counted 35 states, plus Washington, D.C., that implement the taxation method when properties are sold or otherwise transferred to different owners.

The rates, according to the FTA, range from a 0.01 percent levy in Colorado to a 2.2 percent charge on property sales and transfers in Washington, D.C. Two-thirds of the 25 states have their rates below 0.5 percent.

Nationally, property sales and transfer rates and deed recordation taxes generated $6.6 billion in revenues during fiscal year 2004, according to the FTA, which states that Arizona placed a $2 deed recordation tax for property sales and transfers.

The measure to permanently ban property sales and transfer taxes is expected to be well-received, and will rely on both volunteer and paid signature collectors, said Roman.

In 2006, his group successfully pushed for Prop. 203, which levied an 80-cent tax on packs of cigarettes to create the Early Childhood Development and Health fund and a corresponding board.

The current property sales and transfer tax ban requires 230,047 valid signatures of voters be turned in by July 3 for the measure to get on the 2008 ballot.

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