PHOENIX (AP) — Gov. Doug Ducey vetoed a bill Wednesday that would have made Arizona the third state behind Utah and Oklahoma to recognize gold and silver as legal tender.
Proponents say the bill was designed to reflect a growing distrust of government-backed money. Opponents countered that it sends the wrong message that gold and silver are safer than currency.
Ducey said he didn't feel the bill was appropriate at this time.
Former Gov. Jan Brewer vetoed similar legislation in 2013 over concerns that its language might exempt the state from collecting income taxes on transactions involving precious metals.
"This would result in lost revenue to the state, while giving businesses that buy and sell collectable coins or currency originally authorized by Congress an unfair tax advantage," Brewer said of the 2013 bill.
The Legislature passed the House Bill 2176 along party lines.
Republican Rep. Mark Finchem said he sponsored the bill to further protect the state's buying power and consumers' rights to use precious metals as an alternative to paper money.
"There seem to me be this belief that the Federal Reserve note is the only thing we can use to transact business," Finchem said. "Essentially the Federal Reserve note is something other than gold and silver so basically we are using fiat currency in order to transact business."
Businesses in Arizona can already accept precious metals as legal tender.
The bill contains a provision preventing gold and silver form taxation when used as currency, though it could still be subject to federal taxes.
Texas and Louisiana have similar laws that exempt precious metals from taxation.
Democratic Rep. Rebecca Rios voted against the bill in the committee saying she doesn't understand its purpose because it doesn't force businesses to participate, and it wouldn't stop the federal government from collecting capital gains taxes.
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