- Associated Press - Monday, February 2, 2015

PHOENIX (AP) - An Arizona House committee on Monday voted to force cities and towns to stop charging tax on rental properties, a move that cities argue could trigger major cuts but proponents say eliminates a double tax on renters.

House Bill 2254 by Litchfield Park Republican Rep. Darin Mitchell would force 71 cities and towns that now levy rental tax to eliminate residential rental taxes over five years. Phoenix is the largest recipient of the tax money, getting $30 million last year.

Twenty cities and towns don’t levy the fee, including Flagstaff and Tucson.

Mitchell and supporters like the Arizona Multihousing Association call the tax an unfair double tax on renters, who already pay their landlord’s share of property taxes through their rents.

“There’s a genuine disagreement between some of the cities and probably what we are trying to do here,” Mitchell said at a Ways and Means Committee hearing. “But the way I see it, it is a regressive double tax. It hits people at the lower level of the economic strata harder than it does others.”

The League of Arizona Cities and Towns opposes the tax, which raised $87 million last year for services like police and fire departments. Eliminating the tax would hurt city services and be a giveaway to big apartment house owners who aren’t required to pass on their savings, league Executive Director Ken Strobeck said.

“This is not going to make the economy of our state any better. It’s simply going to take $87 million out of our public services and require it to be replaced with new taxes elsewhere,” Strobeck said in an interview. “This is just another special-interest group carving out an exemption for itself and narrowing the tax base.”

The House committee approved the bill on a 5-4 vote, with one Democrat supporting the measure and one Republican opposing it. The committee has nine members, six of whom are Republicans.

Courtney Levinus, a lobbyist for the apartment association, said members should discount arguments that multifamily units put more stress on public services.

“Shelter is a basic need,” Levinus said. “It shouldn’t be taxed more because your only option is to rent your home rather than own your home.”

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