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Could Proposition 126 cut education funding?

Posted at 7:10 PM, Oct 24, 2018
and last updated 2018-10-25 01:13:07-04

A non-partisan think tank is opposing Proposition 126, a ballot measure that would prevent new taxes on services in Arizona. 

"It's a very bad policy," Dave Wells, research director for the Grand Canyon Institute, told ABC15. 

"It would prohibit the state from taxing services or imposing new taxes or increasing taxes on services with its sales tax," Wells said. 

As it stands, the state already exempts most services from being taxed. 

Republicans, including Doug Ducey, oppose the ballot measure as does his opponent in the gubernatorial race, Democrat David Garcia. Wells said the constitutional amendment could impact taxes that come up for renewal in the future. 

When the education sales tax comes up for re-authorization in 2021, "we think that the service component will no longer be able to collect any revenue which will cost around $250-million per year taken away from education," he said. 

Patrick Lewis, president-elect for the Arizona Association of Realtors -- which is behind Prop 126 -- disagrees with Wells' conclusion. 

"That's just flatly not true," he told ABC15. 

"The extension of [the education tax] is an extension of the original tax so, in our opinion, it's grandfathered in," he said. 

If it passes, the language could be challenged and lead to an interpretation by the Arizona Supreme Court. 

Prop 126 applies to taxes on services weren't in place as of December 31, 2017. 

"There's no doubt that politicians are constantly looking for revenue sources and I understand that, however, I largely disagree that it should be done off the backs of Arizonans that are trying to run their small businesses," Lewis said.