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Tax Law

Phoenix Travelers Aren’t Getting a Free Ride

Arizona’s Supreme Court unanimously held that the city of Phoenix’s fee increase on ride-sharing trips at airports are not “transaction-based” fees and therefore constitutional. In 2016, Phoenix’s City Council had amended its City Code to require commercial ground transportation providers to pay a “trip fee” each time drivers picked up passengers from the Phoenix Sky Harbor International Airport. Arizona’s Attorney General challenged the fee under Article 9, section 25 of Arizona’s Constitution, which prohibits state and local governments from imposing or increasing taxes or other “transaction-based” fees on services. Arizona’s Supreme Court concluded that the trip fees were not based on the passenger’s payment of money, and apply whether or not a fare is paid, and are therefore not transaction-based fees. The court characterized the fees as payment to use airport property for commercial purposes.

State of Arizona v. City of Phoenix; No. CV-20-0019-SA