At a video conference meeting on April 14, the Clarkdale Town Council unanimously voted in favor of Ordinance No. 404, “amending the Town Tax Code by setting the general rate of taxation on Food for Home Consumption at 3%.”
The ordinance will officially go into effect on July 1.
In 2001, a Clarkdale ordinance set up its sales tax to not apply to food for home consumption — groceries, snacks and other food meant to be prepared or eaten at home. However, an error by the Arizona Department of Revenue meant that the sales tax on home consumption food had actually been collected for years.
In January, the Clarkdale Town Council discussed the mistake and decided that, in a desire to avoid having to pay $62,000 back to local businesses from the town budget, the town would enact the sales tax on food for home consumption going forward.
In addition to the Dollar General and Number 1 Food Store, there are 40 sellers that have provided sales tax to Clarkdale during the relevant time period, mostly through online sales.
“I think that council struggled with the decision, but they made the right decision,” Clarkdale Town Manager Tracie Hlavinka said. “The truth is, it’s hard to back that much revenue out of the TPT when we’ve been collecting it. … If we don’t collect it, that’s an employee, that’s a project that couldn’t be done.”
Council members indicated that if a grocery store comes to Clarkdale, creating a much higher level of sales of food for home consumption, the council may revisit the tax. However, Hlavinka pointed out that with Cottonwood taxing food, Clarkdale might not want to lose out on tax revenue that residents have been paying to buy groceries in neighboring communities for years.
