The bill, which passed easily in both houses, would have exempted some contractors having to pay an additional sales tax of 0.6% on contracts signed prior to June 1, which is when the tax increase goes into effect. If the contract didn't allow the seller to pass the increase on to the buyer, they would have been exempt from paying the additional 0.6%. The exemption would have ended Dec. 31.
Business leaders and general contractors claim the sales tax increase is unfair to those companies, some of them quite small, who bid on and signed long-term contracts predicated on a sales tax of 5%. Now, those contractors are locked into the price and have to pay the additional sales tax out of their pockets.
Hull's concern is the bill may have unconstitutionally tampered with a ballot measure by voters, who passed the sale tax increase as Proposition 301 in November. She says she also thought the bill was "poor public policy."
Although neither side of the debate could pinpoint just what the exemption would have cost the state, Hull says she felt that is would have been very high. The additional sales tax is expected to raise millions annually to go toward funding to upgrade Arizona schools.
With just days left in the legislative session, it's expected that an override of the vote won't happen. Veto of the bill is expected to result in a fountain of lawsuits from contractors large and small that feel unfairly penalized by the new state sales tax.
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