Surprise enacts out-of-state use tax

Some Surprise residents and businesses that purchase items from out of state will see their bills go up beginning in January.

The City Council unanimously approved enacting a use tax on items purchased from out-of-state retailers or utility businesses making sales of personal property to Arizona buyers.

"An example of this would be if you purchased a vehicle in California and registered it in the state of Arizona," said finance director Robert Nilles. "Right now there is a use tax paid to the state of Arizona, but not to the city of Surprise. (Enacting a city use tax would be) a dual system as far as taxation."

The 2.2 percent tax would be collected when purchasers pay state tax on those items.

Half the cities in Arizona have use tax, including Peoria, El Mirage and Youngtown.

The use tax would affect many businesses, government entities and school districts that purchase items out of state.

Residents, though, are exempt if they purchase items for personal use that are under $1,000 each.

The use tax could help Surprise businesses and also be a boost to the city.

"It levels the playing field for local businesses," said City Manager Randy Oliver.

It is unknown how much revenue will be generated by the use tax, Nilles said.

"We don’t know yet if it will raise a few thousand or few hundred thousand dollars," Nilles said. "It’s hard to identify its capacity."

"But the city of Peoria receives over $1 million because it receives power from out of the state," Nilles said. "So it’s quite a windfall."