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Church State Issues

Churches could see tax-free rent under legislation

Jan 30, 2015

Arizona Republic

As a Libertarian I don't think anybody should have to pay taxes. So I think this special deal for churches should be extended to the rest of us.

On the other hand most atheist don't see eye to eye with me and think churches should have to pay the same taxes everybody else pays.

Churches could see tax-free rent under legislation

Ronald J. Hansen, The Republic | 2:56 p.m. MST January 27, 2015

Religious organizations could be in line for tax-free rent under a bill similar to legislation vetoed last year.

House Bill 2128 passed the Ways and Means Committee on a 6-3 vote Monday, despite concerns the proposed tax break for churches would not be extended to charities and could mean higher property-tax bills for non-exempt landowners and their tenants.

Rep. Darin Mitchell, R-Litchfield Park and chairman of the committee, said Gov. Doug Ducey "would be receptive" to the proposed tax change. A spokesman for Ducey could not be reached for comment.

Former Gov. Jan Brewer rejected a similar measure a year ago, citing worries that it would exacerbate the state's already-chaotic property-tax system. At the time, officials estimated the bill could cost about $2.1 million if the state helped pick up the tab for the property taxes paid by organizations that would be exempt.

The bill would build on an exemption created six years ago for charter schools that rented property, treating them like public-district schools, which don't pay property taxes, supporters said. This year's bill would require an annual affidavit swearing the space is used by a religious organization at market rates.

A pair of Valley pastors testified they currently pay $10,000 or more in property taxes to rent space that expands their new or growing ministries. If they didn't pay the taxes, the men said, it would free them to provide more services for their communities.

Rep. Justin Olson, R-Mesa, said the bill extends the longstanding exemption of religious organizations from paying taxes in Arizona to those who rent in addition to those who own property.

"What we're saying is that we should treat churches equally," he said.

Tory Anderson of the Secular Coalition for Arizona opposed the bill, saying it helped churches but not charities that also are tax-exempt. Olson said he was open to adding a similar exemption for charities, but not in the pending bill.

Rep. Mark Cardenas, D-Phoenix, said the bill would reduce the number of taxpayers but not the tax owed. "Basically, it's going to be a tax increase on everyone else," he said.

Committee OKs bill to tie income tax to online sales tax

A bill to cut state income taxes in line with any future online sales-tax collections narrowly passed the committee. HB 2061 would ensure that the state would not gain extra revenue under an effort pending in Washington to make online purchases routinely subject to state sales taxes.

Rep. J.D. Mesnard, R-Gilbert, acknowledged such purchases are already subject to what is called the use tax, but noted the Legislature recently opted to do away with a special line on tax forms that allowed people to pay the use tax.

"At that point, to me, what we did was say, 'We have no expectation you're going to pay this,' " Mesnard said.

The committee rejected a Cardenas amendment to reduce the state's sales tax rather than its income tax under the bill. Many acknowledged the measure is largely hollow at the moment because the federal bill seems unlikely to pass.