DENVER– A bill that would expand – not repeal – the “Dirty Dozen” taxes signed into law by former Gov. Bill Ritter could be on Gov. John Hickenlooper’s desk in a matter of days.
Democrats claim the bill helps business by simplifying tax collection – Republicans counter it’s an unconstitutional tax increase to generate more than $2.7 million for the Regional Transportation District (RTD) and the Scientific and Cultural Facilities District in metro Denver counties.
House Bill 1272, sponsored by House Minority Leader Dickey Lee Hullinghorst (D-Longmont) and Sen. Pat Steadman (D-Denver), would increase taxes on candy, soft drinks, food containers for takeout and fast food, and direct mail advertisements.
“It’s clear the Democrats are getting their inspiration from (New York Mayor) Michael Bloomberg’s liberal agenda to sanction what people can purchase at a grocery store,” declared Sen. Kevin Grantham (R-Canon City).
Bloomberg banned the sale of soda larger than 16 ounces by restaurants, movie theaters, street carts and sports arena to force New Yorkers to lose weight.
In 2010, Ritter passed the “Dirty Dozen” taxes to cover a shortfall in revenue to balance Colorado’s state budget – and claimed the “sugar” tax would encourage healthier food and drink purchases.
If Hickenlooper signs HB 1272 into law, the “Dirty Dozen” 2.9 percent state tax will expand to 4 percent.
Democrats argue that the taxes don’t violate the Taxpayers’ Bill of Rights, which requires a voter approval to raise taxes, because the revenue generated will not exceed the cap imposed by TABOR. And like the “Dirty Dozen” taxes imposed by Ritter, they claim it’s removing tax exemptions.
The special districts were created by state statute and granted the right to tax industrial tools and machinery, vending machine sales of food such as potato chips and crackers – but not tax soft drinks and candy. However, the Department of Revenue had failed to collect those taxes and award them to the special districts. HB 1272 bill aims to cure that problem by suspending the those taxes and instead extend the state “Dirty Dozen” taxes to generate more tax revenue.
“This bill changes tax policy and increases revenue less than the TABOR limit,” said Rep. Daniel Kagan (D-Cherry Hills Village). “Such changes in tax policy do not require a vote of the people.”
Kagan cited the state Supreme Court ruling that the “Dirty Dozen” taxes levied in 2010, did not violate the TABOR amendment to the constitution.
“I do not believe the Supreme Court is like the Pope and infallible,” countered Rep. Spencer Swalm (R-Centennial). “I think the Supreme Court misread the plain language of TABOR to call what was a tax increase – not a tax increase.”
“Consider that RTD’s FasTracks project is now billions of dollars over budget and decades behind schedule,” said Swalm. “Basically what RTD is doing with this bill is rummaging through the couch cushions and looking for spare change to try and bailout FasTracks.”
Though RTD lobbied for the bill, not all of their board members sanctioned the proposed tax increases.
“I am speaking on my behalf and the citizens who are seeing TABOR ignored,” said RTD Board Director Natalie Menten of Lakewood.
“No matter what it is called, it’s a tax increase,” declared Menten.
Instead of the bill’s premise of helping businesses collect taxes in the special districts, Menten said it has the opposite affect.
Charlie Sheffield of the Colorado Beverage Association said the bill certainly won’t help the soft drink and nonalcoholic beverage businesses which employ an estimated 3,000 people throughout the state.
“If this bill is passed, it will be the second time in four years that our industry has been singled out for a tax increase,” complained Sheffield who urged legislators to find an equitable solution to their revenue challenges.
The bill “is about simplifying the taxes and reporting for businesses,” said Steadman.
“I think that raising taxes on businesses in this economy right now is counterproductive,” declared Swalm. “We need to be talking about creating jobs, helping businesses prosper.”