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ORDINANCE NO. CS 4 58 

AN ORDINANCE RELATING TO TAXATION, AMENDING 

CHAPTER 14 OF THE PHOENIX CITY CODE BY 

AMENDING SECTION 14-100 TO ADD A DEFINITION 

OF "JET FUEL"; AMENDING SECTION 14-400 BY 

ADDING NEN SECTION 14-400(a)(3) IMPOSING A 

PER GALLON PRIVILEGE TAX ON THE SALES OF 

JET FUEL; AMENDING SECTION 14-400(c) 

RELATING TO THE PRESUMPTION OF TAXABILITY 

OF JET FUEL SALES: ADDING NEW SECTION 

14-422 RELATING TO THE PER GALLON TAXATION 

OF JET FUEL SALES, WITH EXEMPTIONS; 

AMENDING SECTION 14-610 EXCLUDING ~ET FUEL 

FROM USE TAXATION; ADDING HEN SECTION 

14-610(£) IMPOSING A PER GALLON USE TAX ON 

JET FUEL; PROVIDING FOR THE EFFECTIVE DATE 

THEREOF; AND DECLARING AN EMERGENCY. 

BE IT ORDAINED BY THE COUNCIL OF THE CITY OF PHOENIX 

as follows: 

SECTION 1. That the Phoenix City Code, Section 

14-100, be amended by adding the definition of "Jet Fuel~ to 

read as follows: 

"JET BUEL" MEANS JET FUEL AS 

DEFINED IN A.R.S. SECTION 42-1571. 

SECTION 2. That the Phoenix City Code, Section 14-400, 

is amended by adding a new Subsection 14-400(a)(3) to read as 

follows: 

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(a) 

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SECTION 3. 

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A PRIVILEGE TAX UPON PERSONS FOR THE 

PRIVILEGE OF SELLING JET FUEL, 

WHETHER DERIVED FROM RESIDENTS OF THE 

CITY OR NOT, OR WHETHER DERIVED FROM 

WITHIN THE CITY OR FROM WITHOUT, IN 

ACCORDANCE WITH THE PROVISIONS OF 

SECTION 14-422. 

That the Phoenix City Code, Section 14-400, 

is amended to read as follows: 

(c) Presumption. For the purpose of proper 

administration of this Chapter and to 

prevent evasion of the taxes imposed by 

·this Chapter, it shall be presumed that 

all gross income, OR GALLONS SOLD, is 

subject to the tax until the contrary is 

established by the taxpayer • 

SECTION 4. That the Phoenix City Code be amended by 

~ adding a new section 14-422 to read as follows: 

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Sec. 14-422. Jet Fuel Sales. 

(a) The tax rate shall be at an amount of 

0.732 cents per gallon sold from the 

business activity upon every person engaging or continuing in the business 

of selling jet fuel. 

(1) Gallons sold includes all gallons 

sold, bartered, exchanged, included 

as part or whole of a trade-out, or 

similar transactions regardless of 

bbe type or form of payment. 

(2) For purposes of this section the 

following terms are substitutable 

in Articles III and v of this 

chapter, and corresponding regulations: 

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(A) "gallons• for •gross income• 

(B) "gallon(s)• for •amount(s)" 

(b) The burden. of proving that a sale of jet 

fuel is not a taxable sale shall be upon 

the person who made the sale. 

(c) Except as provided in Section 14-567, 

when this city and another Arizona city 

or town with an equivalent excise tax 

could claim nexus for taxing a jet fuel 

sale, the city or town where the 

permanent business location of the 

seller at which the order was received 

shall be deemed to have precedence, and 

for the purposes of this chapter such 

city or town has sole and exclusive 

right to such tax. 

(d) The appropriate tax liability for any jet fuel sale where the order is 

received at a permanent business 

location of the seller located in this 

city or in an Arizona city or town that 

levies an equivalent excise tax shall be 

at the rate of the city or town of such 

seller's location. 

(e) Exemptions. Notwithstanding Section 

14-400(d), the exemptions in Section 

14-465 (a), (b) and (d) through (z) will 

apply to sales of jet fuel taxed under 

this Section. 

SECTION 5. That the Phoenix City Code, Section 

14-610(b) be amended to read as follows: 

(b) 

(1) cost of tangible personal property, EXCEPT JET FUEL, acquired from a 

retailer, upon every person storing 

or using such property in this City. 

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SECTION 6. That the Phoenix City Code, Section 14-610 

be amended by adding a new section 14-610(f) as follows: 

(f) Additional Imposition. The tax rate 

shall be at an amount equal to 0.732 

cents per gallon of jet fuel upon every 

person storing or using such property in 

this City. 

SECTION 7. The provisions of this Ordinance shall not 

be in any way construed to impose the cents per gallon use tax on 

jet fuel on which a retail sales tax of 1.2\ has been paid on the 

sale or on which a use tax of 1.2\ has been paid by the taxpayer 

prior to the effective date of this Ordinance. 

SECTION a. The provi~ions of this Ordinance shall be 

~ effective from and after October 1, 1991. 

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SECTION 9. WHEREAS, the immediate operation of the 

provisions of this ordinance is necessary for the preservation of 

the public peace, health and safety, an EMERGENCY is hereby 

declared to exist, and this ordinance shall be in full force and 

effect from and after its passage by the Council as required by 

the City Charter and is hereby exempted from the referendum 

clause of said Charter. 

PASSED by the Council of the City of Phoenix this 

· cia'f of __ l_l....;P ____ , 1991. 

ATTEST: 

-~~1.4·'-A~(;i~~~~t..a~~=~~l!f.!::~~~--·Ci ty Clerk 

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PMH/ds/24961 

Ordinance No.~ l &8 4 58 

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*****************************.************************************************** CITY COUNCIL REPORT FORMAL AGENDA 

DATE: August 12, 1991 DATE: September 4, 1991 

TO: 

THRU: 

FROM: 

Jerry Coffman, Deputy City Manager 

Kevin Keogh, Finance Director 

Ron Crawford, Tax & License Administrator 

SUBJECT: TAXATION OF JET FUEL 

ITEM: 3, p. 2 

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PURPOSE 

The purpose. of this report is to recommend that the City Council revise the 

Privilege License (Sales) Tax on jet fuel from 1.2% of sales to 0.732 cents 

per gallon: Representatives of America West Airlines, Southwest Airlines, the 

League of Arizona Cities & Towns and City staff support this tax revision. 

This item is being placed on the September 4, 1991 Formal Agenda in order to 

make it effective on October 1, which is the same effective date on which the 

State is changing the· taxation of jet fuel. 

BACKGROUND 

Legislation was originally introduced as H.B. 2228, to exempt jet fuel from 

both State and City sales tax and replace it with a cents per gallon motor 

fuel tax. This tax was to be collected by the State and shared with the 

Cities. The Cities opposed this concept which would have restricted the tax 

base, frozen the Cities' tax rates and caused cash flow delays. An agreement 

was made between the Cities, through the League of Arizona Cities & Towns and 

airline representatives that instead of-preemption by the State, both the 

State and the Cities would adopt a sales tax based upon cents per gallon of 

jet fuel sold. This agreement provides the airline industry with the ability 

to more accurately budget taxes on jet fuel because quantities purchased are 

relatively stable while sales price can vary greatly. The Cities retain the 

ability to set their own tax rates and. collect their own tax. 

DISCUSSION 

The State legislature passed revised H.B. 2228 which changes the State 

taxation of jet fuel to a ce~ts per gallon basis, effective October 1, 1991. 

It is desirable that Pho~ix adopt similar tax provisions effectlve October 1, 

1991 for the convenience of the business community.· 

Gross income from sales of jet fuel are currently taxed under Phoenix City 

Code Section 14-460 (retail sales) at a rate of 1.2%. The taxation of jet 

fuel at a rate of 0.732 cents per gallon will return approximately the same 

$1,400,000 in City taxes received during 1990 on 1.2 percent of jet fuel sales. I 

CONCURRENCE 

Industry representatives and the League of Arizona Cities & Towns and City 

staff concur with adoption of a cents per gallon tax on jet fuel. 

r99o 
Jerry Coffman 

August 12, 1991 

Page 2 

RECOMMENDATION 

Staff is placing this item on the September 4, 1991 Formal City Council agenda 

with an emergency clause to allow for an October 1, 1991 effective date. A 

public hearing is required by State law and will be held immediately prior to 

the Council session. Public notice of the hearing must be published in a 

newspaper of general circulation at least 15 days prior to the public h~aring. 

sp2 ron jetfue1 ecr(pnl7966e) 

21901 

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GREEN -CITY CLERK 

WHITE -CITY ATTORNEY 

BLUE -CITY MANAGER 

1'3 CITt:oF PHOENIX, ARIZONA cr-t.J . . REQUEST toR COUNCIL- ACTION f>IN~ - ACCOUNTS NOTIFICATION 

CANARY- DEPARTMENT NOTIFICATION 

BUFF - DEPARTMENT FILE COPY 

ALL RCA'S MUST BE IN THE CITY MANAGER'S OFFICE BY r-!OON ON THE TUESDAY, SEVEN- DAYS BEFORE THE 

FORMAL CITY COUNCIL MEETING WITH A.LL REQUIRED SIGNATURES. COM""ETE THIS FORM PER M.l". t.iO&. 

1. To the City M~M;er: 

DATE August 13, 

THE FOLLOWING COUNCIL ACTION IS HEREBY REQUESTED: IZJ ORDINANCE [J RESOLUTION [J FOFIMAL ACTION. 

AN ORDINANCE RElATING TO TAXATION, AMENDING 

CHAP.IER 14 OF THE PHOENIX CITY CODE BY AMENDING 

SECTION 14-100 TO ADD A DEFINITION OF "JET 

FUEL"~ AMENDING SECTION 14-400 BY ADDING NEW 

SECTION 14-400{a)(3) IMPOSING A PER GALLON 

PRIVILEGE TAX CN THE SALES OF JET FUEL: AMENDING 

SECTION 14-400(c) RELATING 'IO THE PRESUMPTION 

OF TAXABILITY' OF JET FUEL SALES; ADDING NEW 

SECTION 14-422 RELATING 'ID . THE PER GALLON 

TAXATION OF JET FUEL SALES, WITH EXEMPTIONS; 

AMENDING SECTION 14-610 EXCLUDING JET FUEL 

FRCM USE TAXATION; ADDING NEW SECTION 14-610( f} 

IMPOSING A PER GALLON USE TAX ON JET FUEL; 

PROVIDING FOR THE EFFEcriVE DA'IE THEREOF; AND 

DECLARING AN EMERGENCY. ~ 

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~ ordinance changes the sales tax on jet fuel from 1.2 percent of sales to 0. 732 

cents per_ gallon. This revision provides the airline industry with the ability 't9 

nn£-e acctirately budget tax on jet fuel because quantities purchased are relativefy 

st:.pqle while sales price can vary greatly. '!he State legislature adopted similar provi61ons Which become effective October 1, 1991. 

Industry ~presentatives, the League of Arizona Cities and Tbwns and City staff concur 

with adoption of a cents per gallon tax on jet fuel with an October 1, 1991 effective 

da~. 

5. SOURCE OF FUNDS: 

INOEKCOOE SUBpBJECT 

•------- [J BUDGETED 0 SUPPLEMENTAL 0 CONTINGENCY 

8. Emergency CIIIU88? ell YES [J NO 

IF LESS THAN FIVE COUNCIL 

MEMBERS ARE PRESENT: 

IXJ CONTINUE ONE WEEK 

[J ADOPT WITHOUT EMERC..ENCY 

CLAUSE 

10. Formal contract required? 

Previous contract II 

9. Desired Agenda Dale: 

12. Recommended by: 

15. CounciiiCtion taken: 

A£ SOLUTION NO. _______ ORDINANCE rid. G--3 iS' 

Formal action: 

CONTRACT NO.----~-- (;;;iJ 

MANAGEMEHT 6 BUDGET DIRECTOR 
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To: 

From: 

Subject: 

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City • of Phoenix 

Date: August 15 , 

RCAs and Agenda Set-up for Tax Code Change 

City Council Formal Meeting of September 4, 1991 

A.R.S. § 42-1454, adopted in 1990, requires cities to 

hold a public hearing prior to adopting a modification to the 

Model City Tax Code. Since we are contemplating a change in 

the method of taxing jet fuel in order to match the recently 

adopted state tax law change, we need to go though the public 

hearing process. 

It was my thought that, since the closest procedural 

analogy we have is the hearing process for adopting the budget 

and setting the property tax rate, we should probably emulate 

that routine in setting up the September 4 agenda to adopt 

this change. The Law Department therefore recommends to the 

Clerk's Office that, on the September 4 agenda, the first 

three items be as follows: 

Item 1 CITYWIDE - SUSPENSION OF 

RULES - F 

Request that the City Council suspend the rules and 

change the order of business to permit the holding of 

a public hearing on the adoption of and the adoptio~ 

of a change to the Model City Tax Code for the City ·. of Phoenix; a public hearing being required by State 

Law, A.R.S. § 42-1454. Suspension of the rules and 

changing the order of business of the regular City 

Council meeting is required by Rule 5.1 o·f the Rules 

of Conduct of Phoenix City Council Business. 

This item is recommended by Mr. Coffman and the 

Finance Department 

[form for approval] 

FCJCJO 

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Ron Crawford 

Bob Vanegas 

August 15, 1991 

Page 2 

ITEM 2 CITYWIDE - PUBLIC HEARING - ·AMENDMENT TO CITY 

(MODEL CITY) TAX CODE 

F-___ _ 

Public Hearing on adoption of a change to the City 

(Model City) Tax Code as required by A.R.S. § 42-1454. 

This item is recommended by Mr. Coffman and the 

Finance Department. 

[form for approval] 

ITEM 3 CITYWIDE - AMENDING CITY CODE - F-____ _ 

Ordinance No. G- amending Chapter 14 of the. 

Phoenix City Code by amending Section 14-100 to add a 

definition of "Jet Fuel"; amending Section 14-400 by 

adding New Section 14-400(a)(3) imposing a per gallon 

privilege tax on the sales of jet fuel; amending 

Section 14-400(c) relating to the presumption of 

taxability of jet fuel sales; adding New Section 

14-422 relating to the per gallon taxation of jet 

fuel sales, with exemptions; amending Section 14-610 

excluding jet fuel from use taxation; adding New 

Section 14-610(f) imposing a per gallon use tax on 

jet fuel; providing for an effective date thereof; 

and declaring an emergency, ' 

• 

This amendment is necessary to make the City tax 

concur with the new method adopted by the State to 

tax sales of jet fuel. It changes the tax from a 

percentage of gross sales dollars as the basis for 

the tax, to a flat per gallon tax, similar to the 

tax imposed on automobile and truck gasoline taxes. 

The rate is designed to be revenue neutral, and to 

track the percentage-to-gallon formula used in the 

new State law. 

F-110 
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Ron Crawford 

Bob Vanegas 

August 15, 1991 

Page 3 

This item is recommended by Mr. Coffman and the 

Finance Department. 

[form for approval] 

I think that the RCA for the Hearing (Item 2) should 

simply read as a request for the heari~g in the same language 

as shown in Item 2 above, and the RCA for the tax change can 

read as in Item 3 above. I do not know if the Clerk's office 

requires an RCA for Item 1, but if so, I presume that office 

knows how to get it done. The RCAs for 2 and 3 can be 

prepared by Finance. Ron and I have discussed the need to 

include a comment on the need for the emergency clause, and 

have concluded that the CCR which went to the City Council 

earlier obviates the need for an explanation in either the RCA 

or the agenda. In the RCA for Item 2, the box labelled 

"Formal Action .. should be checked, and both RCAs can go from 

the Finance Director to the City Manager without Budget sign 

off. The "Emergency Clause- Yes" box has to be checked on 

Item 3's RCA. If anyone has any questions please call. 

PMH/pp 

02488 

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