VOTE411 Voter Guide

PROPOSITION 316; REFERRED TO THE PEOPLE BY THE LEGISLATURE RELATING TO MUNICIPAL TRANSACTION PRIVILEGE TAX Official Title: AMENDING TITLE 42, CHAPTER 6, ARTICLE 1, SECTION 42-6015, ARIZONA REVISED STATUTES. Descriptive Title: RETROACTIVELY PROHIBITS LOCAL GOVERNMENTS FROM ADOPTING OR INCREASING A TAX ON GROCERIES WITHOUT VOTER APPROVAL AND SETS A MAXIMUM RATE OF 2%. Ballot measures approved by Arizona voters are difficult to change. Constitutional amendments can be changed only if voters approve another constitutional amendment. Voter-approved laws are protected by Arizona’s Voter Protection Act, which prohibits the Legislature from repealing them and allows amendments only with a three-fourths vote of each legislative chamber when the amendment furthers the measure’s original purpose.Impact on ArizonansA YES vote will prohibit new or increased local grocery taxes from July 1, 2025 through June 30, 2027. After that, local voter approval would be required for a new or increased grocery tax, and any new or increased rate could not exceed 2%. Existing grocery taxes could continue; existing rates of 2% or more would not have to be reduced but could not be increased.A NO vote will maintain current Arizona laws governing local taxation, without adding Proposition 316's restrictions on new or increased local grocery taxes.BackgroundArizona does not impose a state transaction privilege tax (TPT) on food purchased for home consumption, but cities, towns, and other local taxing jurisdictions may impose local taxes on these purchases. Current law regulates how such taxes are applied, including a requirement that they be applied uniformly to covered food items.Proposition 316, referred to the ballot by the Arizona Legislature in 2025 as HCR2021, would establish new statewide limits on local taxes on food and certain nonalcoholic beverages intended for home consumption. It would cap covered local tax rates at 2%, require voter approval for new taxes and certain increases, and restrict taxes adopted or increased during a specified period. If approved, the measure would become effective upon the Governor's proclamation and would apply retroactively to January 1, 2025.Key Provisions:Allow existing local grocery taxes to continue. Cities, towns, and other taxing jurisdictions that had approved a tax on food for home consumption on or before January 1, 2025, could continue imposing that tax, subject to the measure's restrictions on future increases.Require voter approval to increase an existing tax below 2%. If the existing grocery tax rate is less than 2%, any increase would require approval from local voters, and the increased rate could not exceed 2% of the tax base.Prohibit increases to existing rates of 2% or more. A jurisdiction that already had an approved grocery tax rate of 2% or higher could continue the existing rate but could not increase it. The measure does not require an existing rate above 2% to be reduced to 2%.Require voter approval for new grocery taxes. A jurisdiction that had not approved a grocery tax on or before January 1, 2025, would need voter approval to establish one or subsequently increase it. A new or increased rate could not exceed 2%.Restrict adoption or increases during the specified two-year period. A covered grocery tax could not be newly adopted or increased during the 24 months preceding June 30, 2027. If approved by voters, the measure would become effective upon the Governor's proclamation and would apply retroactively to January 1, 2025.Fiscal Analysis The measure is not expected to affect the state General Fund because Arizona does not impose a state TPT on food for home consumption. It could, however, affect revenues collected by cities, towns, and other local taxing jurisdictions. The amount would depend on each jurisdiction's existing tax rate and whether it adopted or increased a covered tax during the period affected by the measure. Jurisdictions could also be limited in their ability to establish or increase these taxes in the future without voter approval.For more information:Official Ballot LanguageArizona Joint Legislative Budget CommitteePublicly filed arguments for Publicly filed arguments againstDownload 2026 BALLOT PROPOSITIONS: MEET VOTE411LWVAZ nonpartisan guide to all the 2026 ballot propositions