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.-. ORDINANCE NO. 

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### 58 AN ORDINANCE RELATING TO TAXATION, AMENDING CHAPTER 14 OF THE PHOENIX CITY CODE BY AMENDING SECTION 14-100 TO ADD ADEFINITION 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 APER 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 CityCode, 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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SECTION 3.

# .. . APRIVILEGE 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:



# .. .' 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 activityupon 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 inArticles 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 cityor 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 cityor town has sole and exclusive right to such tax. (d) The appropriate tax liability for any jet fuel salewhere the order is received at a permanent business location of the seller located in this city or in anArizona 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 CityCode, 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 

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PMH/ds/24961 Ordinance

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### ******************************************************************************* *****************************.************************************************** CITY COUNCIL REPORT FORMAL AGENDA DATE: August 12, 1991 DATE: September 4, 1991 TO: THRU: FROM: Jerry Coffman, Deputy CityManager KevinKeogh, Finance Director Ron Crawford, Tax

### &License Administrator SUBJECT: TAXATION OFJET FUEL ITEM: 3, p. 2 

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PURPOSE The purpose.of this report is to recommend that the CityCouncil revise the PrivilegeLicense (Sales) Tax onjet fuel from 1.2% of sales to 0.732 cents per gallon: Representatives ofAmerica West Airlines, Southwest Airlines, the League ofArizona 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 onOctober 1, which is the same effective date onwhich the State is changing the·taxationofjet fuel. BACKGROUND Legislationwas originally introduced as H.B. 2228, to exempt jet fuel from both State and City sales tax and replace itwith a cents per gallonmotor fuel tax. This taxwas to be collectedby the State and shared with the Cities. The Cities opposed this concept whichwouldhave restricted the tax base, frozen the Cities' taxrates and caused cashflow delays. An agreement was made betweenthe Cities, through the League ofArizona Cities &Towns and airline representatives that instead of-preemptionby the State, both the State and the Citieswould adopt a sales taxbasedupon cents per gallon of jet fuel sold. This agreement provides the airline industrywith the ability to more accuratelybudget taxes onjet fuel because quantities purchased are relatively stable while sales price canvary greatly. The Cities retain the ability to set their own tax rates and. collect their own tax. DISCUSSION The State legislature passed revisedH.B. 2228 which changes the State taxation ofjet fuel to a

**ce~ts** per gallonbasis, effective October 1, 1991. It is desirable that

**Pho~ix** adopt similar taxprovisions effectlve October 1, 1991 for the convenience of the business community.· Gross income from sales ofjet fuel are currently taxed under Phoenix City Code Section 14-460 (retail sales) at a rate of 1.2%. The taxation ofjet fuel at a rate of 0.732 cents per gallonwill return approximately the same $1,400,000 in City taxes received during 1990 on 1.2percent ofjet fuel sales. I CONCURRENCE Industry representatives and the League ofArizona Cities

### &Towns and City staff concurwith adoption of a cents per gallon tax onjet fuel. 

## r99oJerry Coffman August 12, 1991 Page 2 RECOMMENDATION Staff is placing this itemon the September 4, 1991 Formal CityCouncil agenda with an emergency clause to allow for an October 1, 1991 effective date. A publichearing is requiredby State law and will beheld immediatelyprior to the Council session. Publicnotice of thehearingmust be published in a newspaper of general circulation at least 15 days prior to the public

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**f>IN~** - ACCOUNTSNOTIFICATION CANARY-DEPARTMENTNOTIFICATION BUFF - DEPARTMENTFILECOPY ALL RCA'S MUSTBE INTHECITY MANAGER'SOFFICE BY r-!OON ONTHETUESDAY, SEVEN-DAYSBEFORETHE FORMALCITYCOUNCILMEETINGWITHA.LL REQUIREDSIGNATURES.COM""ETETHISFORMPER M.l".t.iO&. 1. TotheCity

**M~M;er:** DATE August 13,
THEFOLLOWINGCOUNCILACTIONISHEREBYREQUESTED: IZJ ORDINANCE [J RESOLUTION [J FOFIMALACTION. 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 ANEMERGENCY. 

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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 Whichbecome 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

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# •------- [J BUDGETED 0 SUPPLEMENTAL 0 CONTINGENCY 8. EmergencyCIIIU88? ell YES [J NO

IFLESSTHANFIVECOUNCIL MEMBERSAREPRESENT: IXJ CONTINUEONEWEEK [J ADOPTWITHOUTEMERC..ENCY CLAUSE 10.Formalcontractrequired? PreviouscontractII 9. DesiredAgendaDale: 12. Recommendedby:

15. CounciiiCtiontaken: A£SOLUTIONNO._______ORDINANCE

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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]


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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 byMr. 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.


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0 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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