PHOENIX - The new head of the Senate Government Committee wants to help generate economic development by reducing taxes.

But the way he is doing it is generating friction from business interests.

The proposal by Sen. Jack Harper, R-Surprise, would allow multi-state corporations to use an optional formula to compute their Arizona income taxes.

Specifically, they could determine the Arizona share of their worldwide income based solely on what percentage of their sales are made in Arizona.

What that means is that companies who sell most of their items elsewhere, like firms that make computer chips, aircraft engines and missiles, could end up owing virtually no tax at all.

That's something business lobbying groups have been seeking for years.

But they're not big fans of SB 1024. That's because it would apply only outside the state's two major metropolitan areas; firms that locate in the Phoenix and Tucson areas would have the current - and less favorable - tax treatment.

And it could mean that companies with manufacturing operations in those areas might decide to pack up and move their operations to rural areas, especially if it could save millions of dollars. Harper said that's not his intent.

David Maurer, chief executive officer of the Prescott Chamber of Commerce, said he appreciates the sentiment behind what Harper is doing. "I'm sure his intent is a good one," said Maurer, who said he was not consulted before Harper introduced his measure. But Maurer said rural chambers cannot be in a position of seeking some benefit not available elsewhere. So he said his organization will support the 100 percent sales factor - but only if it applies to all corporations statewide.

Barry Albrecht, executive director and CEO of the Sierra Vista Economic Development Foundation, said he congratulated Harper on the effort to try and create incentives to attract business to Arizona. But he doesn't see the bill passing.

Instead, Albrecht said he feels Arizona needs a change of philosophy in regards to how it tries to attract businesses and what type it attracts. This, he said, needs to come from the Arizona Department of Commerce and the governor's office.

Albrecht also said there needs to be a statewide incentive, not just an incentive featuring rural areas.