Proposed tax increase would bring Prescott’s total sales tax to 9.1%
With the additional 0.75-percent tax proposed by Proposition 443, Prescott’s sales tax rate would remain competitive with other municipalities in the region, but would rise above that of a number of Phoenix-area communities.
With the 0.75-percent tax, Prescott’s sales tax would total 9.1 percent. That compares with Prescott Valley’s 9.18 percent, and Chino Valley’s 10.35 percent.
Currently, Prescott’s rate totals 8.35 percent. That includes the city’s existing 2 percent (1 percent for the general fund, and 1 percent for a voter-approved street-improvement program), the state’s 5.6 percent, and Yavapai County’s 0.75 percent.
By comparison, Phoenix has a combined sales tax rate of 8.6 percent, while Scottsdale has a rate of 7.95 percent.
According to information calculated by the city for its council Strategic Planning Committee earlier this year, the 0.75-percent increase would cost residents who earn the area’s median income of $46,000 per year about $173 per year (or about 47 cents per day).
The city also calculated that the existing 2-percent tax costs residents about $460 per year. With the additional $173 from a 0.75-percent increase, the total city sales tax burden would be about $633 per year.
The 0.75-percent tax is being proposed to generate revenue to help the city pay down its more than $78 million unfunded-liability debt with the Public Safety Personnel Retirement System (PSPRS).
The tax is proposed to take effect Jan. 1, 2018, and end the earlier of Dec. 31, 2027, or when the city’s PSPRS unfunded liability totals $1.5 million or less.
The Proposition 443 sales tax measure appears on the city primary ballots that are scheduled to go out to Prescott voters on Monday, Aug. 7.