July 15, 2021
By Timothy Sandefur
There’s a big difference between a circus and a shooting range, but not in the eyes of the Arizona Department of Revenue, which is redefining reality in an attempt to expand its authority to tax businesses in the state. The Goldwater Institute is taking aim at this tax grab and urging the Arizona Supreme Court to overturn the Department’s efforts.
In Arizona, “places of amusement” like circuses and bowling alleys historically have been taxed at a higher rate. But recently, the state Department of Revenue re-labeled shooting ranges—where people go to practice self-defense—as “places of amusement” for purposes of tax law. In a decision issued in April, the state Court of Appeals ruled that firing ranges fall under the “amusement” classification because they are “comparable” to “amusement parks.” That meant Shooter’s World—a combination gun store and firing range in Phoenix—had been under-reporting its taxes for years.
But as Goldwater argues in its friend of the court brief, shooting ranges aren’t normally regarded as places of “amusement.” They’re places people go to learn and practice a potentially dangerous skill. And that’s an important distinction, because almost 30 years ago, state lawmakers amended the tax law to remove “places of instruction” from the tax and replace it with “places of entertainment.” In doing so, they created an exemption for businesses such as aerobics studios or martial arts dojos, because these are places where people go to learn and practice their skills—which is different from places such as carnivals, circuses, or fairs which is what the tax was intended to apply to.
The Arizona Supreme Court has said time and again that judges should interpret tax laws “strictly” and should not expand their scope based on mere “implication.” But in its April decision, the Court of Appeals disregarded that warning. In a remarkably cursory opinion, it simply said that it a shooting range “offers the same type or nature of activity as those provided by the businesses specifically [listed] in [the tax law].” But the businesses specifically listed in the tax law include “races, contests, games, billiard or pool parlors, bowling alleys, public dances, dance halls,” and so forth—all businesses notably different from a shooting range, where people receive training, instruction, and supervision at all stages and are there to learn and practice their self-defense skills.
By interpreting the state’s tax laws so broadly, the lower court judges didn’t just stretch the tax power beyond what the people’s elected representatives authorized, but also intruded on the individual’s right to practice self-defense. Higher taxes increase prices for everybody, and they make it harder for Arizonans to access the goods and services they need. We urge the state’s high court to review the case and ensure that the taxing power remains within its limits.
Timothy Sandefur is the Vice President for Litigation at the Goldwater Institute.