There is hereby levied upon persons on account of their business activities within the town, and shall be collected by the Collector for the purpose of raising revenue to be used in defraying the necessary expenses of the town, privilege taxes to the extent hereinafter provided, to be measured by the gross sales or gross income of persons, whether derived from residents of the town or not; or whether derived from within the town or from without, and all of the gross sales or gross income shall be used to measure the tax in accordance with the following schedules:
(A) At an amount equal to 1% of the gross proceeds of sales or gross income from the business upon every person engaging or continuing within the town in the following businesses:
(1) Transporting for hire persons or property by any means of transportation from a point within the town to another point within the town, or from a point within the town to another point within the state;
(2) Mining, quarrying, smelting or producing for sale, profit or commercial use, any oil, natural gas, limestone, sand, gravel, copper, gold, silver or other mineral product, compound or combination of mineral products, or felling, producing or preparing timber or any produce of the forest for sale, profit or commercial use. In computing the tax, the price shall be reduced by the actual freight paid by any person from the place of production to the place of delivery when the freight is included in the sale prices of the products;
(3) Operating a pipe line for transporting oil, or natural or artificial gas, through pipes or conduits from a point within the town to another point in the town or in the state;
(4) Operating private railroad car lines, as they are defined in A.R.S. Title 40, Ch. 4, Art. 3, from one point within the town to another point in the town or state;
(5) Publication of newspapers, magazines or other periodicals and publications when published within the town including the gross income derived from subscriptions sold within the town, advertising and notices. Subscriptions sold with the town for newspapers, magazines or other periodicals and publications published without the town shall also be taxable under this section, and advertising sold within the town shall likewise be taxable;
(6) Job printing, engraving, embossing and copying, advertising by billboards, direct mail, radio, television or by any means calculated to appeal to prospective purchasers or users;
(7) Contracting within the town; but payments by the contractor for labor costs incurred for the contracting may be deducted. Amounts paid by the contractor for subcontractors may be deducted; providing that, subcontractors and amounts paid to each are listed and providing that the subcontractors have valid privilege licenses in the town. Gross receipts from sale of land by a contractor or developer are subject to taxation under this section if the contractor or developer has constructed physical improvements for the land before the sale is made. Exception: a contractor constructing a building for his or her own use, or a structure or parking lot to be rented by him or her, is not taxable for his or her own activity of a project; providing, he or she has paid all applicable privilege taxes on materials he or she purchased for incorporation in the project. However, contracting activity by subcontractors for a project shall be taxable;
(8) Conducting restaurants, dining cars, dining rooms, lunchrooms, lunch stands, soda fountains or similar establishments where articles of food or drink are sold for consumption on the premises or on the dining cars;
(9) Any business transmitting electronic impulses or signals, or receiving and transmitting television signals or communications. In the case of persons engaged in the business classified in division (A)(2) above, whose incomes in whole or in part are derived from service or manufacturing charges instead of from sales of the projects manufactured or handled, the rate shall be applied to the gross income of the persons derived from the manufacturing or service charge;
(10) Producing and furnishing, or furnishing to consumers, electricity, electric lights, current, power or gas, natural or artificial, and water, except those businesses furnishing the products taxed under any other chapter of this code;
(11) When any person is engaged in the business of selling the tangible personal property at both wholesale and retail, the retail rate shall apply only to the gross proceeds of the sales made other than at wholesale when his or her books are kept so as to show separately the gross proceeds of sales of each rate shall be applied to the gross proceeds of every sale so made;
(12) The sale to hotels, restaurants, dining cars, lunchrooms, boarding houses or similar establishments or articles used by humans for food, drink or condiment, whether simple, mixed or compounded, where the articles are customarily prepared and served to patrons for consumption on the premises or on the dining cars, shall be deemed wholesale sales as to the commodities, and the person who then resells the commodities in a cooked or prepared form shall be deemed to be engaged in the business classified in this division (A);
(13) Selling tangible personal property whatsoever at retail or to the ultimate consumer, including, but not limited to, sale of new or used vehicles of any type, and sales made from mobile units when within the town. Gross receipts from painting signs on structures within the town or upon vehicles while within the town shall be taxed as retail sales, without deduction. Sales of tangible personal property within the state which result from activities of agents or representatives of agents or representatives of a person whose principal or branch office within the state is within the town shall be taxable; provided that, delivery is made from the town;
(14) Operating or conducting amusements, including, but not limited to, theaters, movies, operas, exhibitions, concerts, carnivals, circuses, shows of any type or nature, amusement park admissions, amusement rides, menageries, fairs, races, contests, games, golf courses, tennis courts, batting or driving ranges, riding on any animals, juke boxes, pinball machines, billiard and pool parlors, bowling alleys, dance halls, public dances, boxing or wrestling matches, or any other business charging admission fees for exhibition or amusement. Non-profit private clubs, where basic membership fees cover use of amusement facilities, and amusements conducted by the organizations themselves on an occasional basis to raise funds for projects of bona fide religious organizations, non-profit educational institutions and non-profit fraternal or service clubs, shall not be subject to the tax prescribed by this subchapter;
(15) Leasing or renting for a consideration any tangible personal property; sales of tangible personal property to be so leased or rented shall be deemed to be resale sales. Leasing or renting for a consideration the use or occupancy of real property, including any improvements, rights or interest in the property;
(16) The tax prescribed under the terms of this section shall not apply to events sponsored by the State Coliseum and Exposition Center Board or County Fair Commission;
(17) Slaughtering animals for food, packing, processing or compounding meat or meat products; and
(18) Selling poultry or stock feed to poultrymen or producers of poultry and poultry products or to stockers or feeders of stock, at wholesale prices for their own use and not for resale.
(B) Basis for taxation under certain conditions.
(1) In determining value as applied to sales from one to another person, or other circumstances where the relation between the buyer and seller is such that the gross proceeds from the sale are not indicative of the true value of the subject matter of the sale, the Council may prescribe uniform and equitable rules for determining the value upon which the tax shall be based, corresponding as nearly as possible to the gross proceeds from the sale of similar products of like quality or character by other taxpayers where no common interest exists between the buyer and seller, but otherwise under similar circumstances and conditions.
(2) For the purpose of computing the tax imposed by this subchapter, conditional or time sales shall be treated as credit sales and the tax shall be based only upon the amounts received under the security agreements, but if the seller transfers his or her interest in the agreements to a third person, he or she shall pay an amount based upon the full sale price of the commodity, unless a record is kept of payments thereafter made on the contract in a manner that a Tax Collector may, at all times, ascertain from the records of the seller the amount paid thereon by the purchaser. If, at any time, the Tax Collector cannot so ascertain the amount paid thereon, the tax shall be computed to include any amounts not shown to be paid by the records of the seller to the satisfaction of the Tax Collector.
(3) When any person is engaged in an occupation or business to which this section is applicable, the person’s books shall be kept so as to show separately the gross proceeds of sale of tangible personal property and the gross income from sales of non-taxable service, and if not so kept, the tax shall be based upon the total of the person’s gross proceeds of sales of tangible personal property and gross income from service.
(4) For the purpose of this subchapter, the total amount of gross income, gross receipts or gross proceeds of sale shall be deemed to be the amount of the sale, exclusive of the tax imposed by this subchapter; providing, the person upon whom the tax is imposed shall establish to the satisfaction of the Tax Collector that any tax collected from customers has been added to the sale price and not absorbed by him or her, and that all business records so indicate.
(C) The following retail sales activities are exempted from taxation:
(1) Sales of tangible personal property to a person licensed as a contractor under A.R.S. Title 32, Ch. 10, who holds a valid privilege tax permit for engaging in or continuing in the business of contracting when the property so sold is incorporated or fabricated by the contractor into any structure, project, development or improvement in fulfillment of a contract therefor;
(2) Sales of tangible personal property made directly to the United States government, its departments or agencies, by the manufacturer, modifier, assembler or repairer. A deduction of 50% shall be permitted where the sales are made by persons other than those specified in the previous sentence;
(3) Sales of tangible personal property by persons engaging in or continuing in the business of processing, manufacturing, fabricating, modifying, assembling or repairing, when the sales are made for resale and not at retail or not to an ultimate consumer;
(4) Sales of tangible personal property to manufacturers, modifiers or assemblers where the property directly enters into and becomes an ingredient or component part of any manufactured, fabricated or processed article, substance or commodity for sale in the regular course of business;
(5) Services provided in connection with retail sales, if invoices to the customer, sales tickets, cash register tapes, and all other business records show separate charges for the services, but this exemption shall apply only where the service is not customarily included in the retail sale itself and where the service is not an essential element in the retail sale itself, and no deduction shall be allowed for fabrication labor or retail items sold;
(6) Sales of tangible personal property without the corporate limits of the town. For the purpose of this exemption, any person engaging or continuing in the business to which this exemption is applicable, shall maintain and keep accounting records or books indicating separately the gross proceeds of sale or gross income of tangible personal property which occur without the corporate limits, and if not so maintained the tax to be imposed will be upon the total of the person’s gross proceeds of sale or gross income;
(7) The sales of drugs on the prescription of a member of the medical, dental or veterinary profession who is licensed by law to administer the drugs;
(8) Tangible personal property purchased in the state by any hospital organized and operated exclusively for charitable purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual, or by any hospital operated by the state or any political subdivision of the state; and
(9) The sale of stocks or bonds.
(1974 Code, § 8-2-3)