PHOENIX (Reuters) - Arizona Governor Jan Brewer vetoed a measure on Thursday that would have made gold and silver legal tender in the state, saying the legislation could have resulted in lost tax revenue.
The Republican-controlled state legislature voted through the measure last month in a response to what backers said was a lack of confidence in the international monetary system.
The bill called for Arizona to make gold and silver coins and bullion legal tender beginning in mid-2014, joining existing U.S. currency issued by the federal government.
“While I believe the concern over a devalued dollar as a result of an unsustainable federal deficit is justified, I am unable to support this legislation,” Brewer, a Republican, said in an open letter to state Senate President Andy Biggs.
Brewer noted that the “administrative and fiscal burdens” for taxpayers and the revenue department “remain vague.” She also cited uncertainty over whether the legislation would have required the state to exempt transactions involving collectable coins and bills that were authorized by Congress and could be used as legal tender.
“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,” she said.
The push to establish gold and silver as currency has become increasingly popular in the United States in recent years among some hardline fiscal conservatives, with the backing of groups including the Tea Party movement, American Principles Project and the Gold Standard Institute.
Senator Chester Crandell, a Republican and sponsor of the bill, previously said the ability to use gold and silver in everyday life in the state was still a “work in progress” and that more legislation was needed before it could be viable. He could not immediately be reached for comment.
Democratic state Senator Steve Farley, an opponent of the measure who had warned it could create massive problems for businesses and government officials trying to administer what would in effect be a dual monetary system, welcomed the veto.
“I was very pleased the governor showed the common sense to realize this was a terrible move for Arizona that would have caused incredible negative consequences at a government and business level,” Farley told Reuters.
Had Brewer signed the measure, Arizona would have become the second state in the nation to establish the precious metals as legal tender. Utah approved such legislation in 2011.
Editing by Cynthia Johnston and Eric Walsh