Gilbert's new use tax and updated sales and bed tax rates took effect Wednesday with the start of the new year. Gilbert Town Council passed the package of increases Oct. 22.
The use tax applies to items that were purchased from out-of-state retailers or through online transactions for vendors who do less than $100,000 in annual sales in Arizona. Gilbert has not been charging a use tax as many municipalities in the Valley do.
The sales tax increased from 1.5% to 2%, or about 50 cents on $100 of spending. A 2% sales tax aligns Gilbert with most Valley cities.
The bed tax, applied to people staying at hotels in town, was raised from 2.8% to 5%, which is the rate most Valley cities charge, Budget Director Kelly Pfost said. It also has been one that has been supported by local hotels, as some of the revenue must be used to promote tourism.
Gilbert staff estimates that the three taxes will raise about $55 million per year, and besides the small amount of revenue from the bed tax that would be restricted to tourism uses, the money is to help Gilbert cash-fund as much of its priority capital projects as possible.
The money goes into the town's general fund. However, that fund already is under pressure this fiscal year.
Pfost, speaking at the town's annual legislative breakfast Thursday with its state representatives, said sales tax collection for fiscal year 2024-25 is down slightly from last year to about the same level as in fiscal year 2022-23.
Add to that the loss of some state shared income tax revenue and the state eliminating the rental tax, and the town's revenue picture in the immediate future is tight.
"It's been kind of a challenge to work through that decrease over the last couple of years as our town continues to grow," Pfost said.
Rep.-elect Jeff Weninger, R-Chandler, asked if the town was concerned that the increase, along with minimum wage hikes forcing businesses to increase prices, would drive overall sales down further. Pfost acknowledged the possibility.
"There's X amount of dollars, so people are buying less things that cost more money," she said.
We would like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org. Tom Blodgett can be reached by email at tblodgett@iniusa.org or follow him @sp_blodgett on X.
Meet Tom Tom Blodgett joined Independent Newsmedia, Inc., USA, in 2022, when the company acquired Community Impact Newspaper's Phoenix-area properties. Raised in Arizona, he has spent more than 35 years in journalism in the state.
Community: He has served as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication since 2005, and is editorial adviser to The State Press, the university's independent student media outlet. He also is director of operations for an 18U girls fastpitch softball team from Gilbert.
Education: Arizona State University with a BS in Journalism.
Random Fact: He lived in Belgium during his freshman year of high school.
Hobbies: Tweeting enthusiastically about ASU softball (season-ticket holder) and grumpily about other local sports (pessimistic fan).
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