A new 2% sales tax on grocery items will be levied in Phoenix beginning April 1 following approval last week by the City Council. The tax is scheduled to expire in five years.
Phoenix residents currently pay an 8.3% sales tax on non-food item purchases, including the city’s 2% sales tax. The new 2% food sales tax is expected to generate $12.5 million in fiscal 2010, which ends June 30, and $50 million in fiscal 2011.
The tax will not apply to items purchased with food stamps.
Phoenix is facing a $241 million deficit in its general fund for fiscal 2011. City manager David Cavazos has proposed eliminating almost 1,400 city jobs next year, including 500 firefighters and police officers.
Cavazos is set to brief the City Council today on which positions could be financed with revenue from the new food sales tax.