Lawmakers want to let voters restrict Arizona grocery taxes

State lawmakers want to give voters the option to restrict how much cities and towns can tax groceries.

Rep. Leo Biasiucci (R-Lake Havasu City) opposes the grocery tax, which dozens of Arizona municipalities currently levy, and he initially proposed banning it entirely.

Now, his amended proposal would cap the tax at a rate of 2% - half of what’s currently allowed.

“This is the most regressive tax you can think of - is to tax food, which you need to survive,” Biasiucci said. “So, this is why we came up with the compromise.”

Lobbyists representing Arizona cities and towns say local officials aren’t on board.

Without grocery tax revenues, they warn, municipalities will have to cut essential services or raise taxes elsewhere, especially small towns.

“The choice to cap at 2% saves the whales and hurts the Nemos; the small cities are the ones who have the higher rates because they have the less diverse tax base,” said Nick Ponder, speaking on behalf of the League of Arizona Cities and Towns.

Howard Fischer/Capitol Media Services

In response to that concern, Biasiucci said there are already small towns like Quartzsite and Williams without a grocery tax.

In 2023, GOP lawmakers tried to abolish the grocery tax entirely, but their bill was vetoed by Democratic Gov. Katie Hobbs.

“I’ve heard from dozens of local leaders about the impact this legislation would have on municipalities,” Hobbs wrote in her veto letter. “From potential cuts to services - including public safety - to increased property taxes, it’s clear that this bill doesn’t actually eliminate costs for our residents. It simply moves those costs around.”

Biasiucci’s measure would bypass the governor’s veto stamp. If approved by the Legislature, voters would decide the fate of the grocery tax on the 2026 ballot.

“I don’t know a single person in Arizona, a voter or a constituent, who’s going to say, ‘Yes, continue to tax me on these things that I have to put on the table for my family,’” Biasiucci told his colleagues. “At a time when inflation is through the roof, these taxes are going higher. You’re paying more.”

Not all municipalities with a grocery tax have the maximum 4% rate. It ranges between 1.5% to 4% across the state.

Under the bill’s language, voters in a municipality could choose to raise grocery tax up to 2%, but local governments wouldn’t be able to do it unilaterally.