Assigned to FIN FOR
COMMITTEE
Assigned to FIN FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
Purpose
Requires a municipal food tax to be uniformly applied to all food items that are subject to the tax. Prohibits additional tax or fee differentials from being applied to specific food items. Specifies which food and related items may not be taxed.
Background
Statute requires the Arizona Department of Revenue to adopt rules defining food (A.R.S. § 42-5106). Under the Arizona Administrative Code, food is defined as items intended for human consumption. Food is deemed to be intended for human consumption when its intended or ordinary use is as a food for human consumption or when it is an ingredient that is used in preparing food for human consumption. Items that are currently not considered to be food for human consumption include: 1) pet food and supplies; 2) dietary supplements such as vitamins or protein supplements; and 3) medicines.
Food for consumption on the premises includes: 1) food served by an attendant to be eaten at tables, chairs, benches, booths, stools, counters and within parking areas (for in-car consumption); 2) food sold by caterers; and 3) food sold within the premises of theaters, exhibitions, fairs, amusement parks, bowling alleys, athletic events, other shows or contests, and any businesses charging admission, entrance or cover fees for exhibition, amusement, entertainment or instruction. Food intended for home consumption refers to food, other than food for consumption on the premises, which is usually intended to be consumed at home. Food that is delivered by a retailer to an office or other business establishment is not considered to be food intended for home consumption (A.A.C. R15-5-1860).
The Model City Tax Code (MCTC) allows a municipal privilege tax to be levied on the business of: 1) preparing or serving food or beverages at a bar, cocktail lounge, restaurant or a similar establishment where articles of food or drink are prepared or served for consumption either on or off the premises, including catering; and 2) selling food for home consumption at retail (MCTC §§ 4-455 and 4-462).
There is no anticipated fiscal impact to the state
General Fund associated with this legislation.
Provisions
1. Requires a city, town or other taxing jurisdiction that imposes a transaction privilege tax (TPT), sales, use, franchise or other similar tax or fee on the sale of food items intended for human consumption, either at home or on premises, to do the following:
a) apply the tax uniformly with respect to all food; and
b) not assess or apply an additional tax or fee differential with respect to any specific food item.
2. Prohibits a city, town or other taxing jurisdiction from levying a TPT, sales, use, franchise or other similar tax or fee on the following:
a) the manufacture, wholesale or distribution of food items intended for human consumption, either at home or on premises;
b) any container or packaging used exclusively for transporting, protecting or consuming such food items;
c) the sale of food or other items purchased with U.S. Department of Agriculture (USDA) food stamp coupons or food instruments; and
d) the sale of low or reduced cost food or drink articles to eligible elderly, homeless or disabled persons by a business that is:
i. subject to TPT under the restaurant classification;
ii. contracts with the Arizona Department of Economic Security; and
iii. is approved by the USDA Food and Nutrition Service for purchases made with Supplemental Nutrition Assistance Program benefits.
3. Makes conforming changes.
4. Becomes effective on the general effective date.
House Action
WM 2/7/18 DP 8-1-0-0
3rd Read 2/21/18 47-13-0
Prepared by Senate Research
March 5, 2018
FB/lb