DENVER–Colorado Republicans aren’t known as fans of either high taxes or recreational drugs, but when given a choice, it turns out they hate taxes more.
House Republicans are pushing to reduce the proposed special sales tax on recreational marijuana to 10 percent, lower than the 15 percent tax rate favored by Democrats.
Debate on the tax rate is expected to resume Monday after concluding early Saturday morning without a vote.
Tempers flared after the Democratic leadership cut off state Rep. Bob Gardner (R-Colorado Springs) during his remarks on the marijuana-taxation bill shortly before midnight Friday. Republicans staged a walk-out, then returned briefly before the House adjourned for the weekend.
Amendment 64, the marijuana-legalization measure approved in November, calls for voters to approve a 15 percent excise tax. House Bill 1318 adds a 15 percent special sales tax to help cover costs related to marijuana regulation and enforcement.
Any tax increase must be approved by the voters, but Republicans say they worry that taxpayers may reject a proposal that essentially doubles the tax rate specified under Amendment 64. In that case, the concern is that the general fund would be forced absorb costs associated with implementing the measure.
“If we set this rate too high, the higher the rate, the higher the chance this tax does not pass,” said state Rep. Brian DelGrosso (R-Loveland). “If the tax doesn’t pass, we’re stuck with a 2.9 normal sales tax. To think that is enough to cover this entire industry, that is not reality.”
Leaders of the Amendment 64 campaign threw their support behind the 10 percent rate Friday after learning that legislators are considering a ballot measure that would repeal the amendment if the tax increase fails. No such proposal has been introduced yet.
“If legislators are concerned that a special tax rate of 15 percent will not pass, they should consider reducing it to 10 percent instead of embracing the nuclear option proposed by anti-marijuana advocates,” said Mason Tvert, who led the Amendment 64 campaign, in a statement.
Democrats attempted to find wiggle room Friday by proposing an amendment Friday night that would set the sales tax initially at 10 percent, but give the legislature the option of raising it, with a cap of 15 percent.
“We also need to make sure we do not put too low of a tax and end up having to go back to the taxpayers and say, ‘We didn’t do the right job,’” said Rep. Jonathan Singer (D-Longmont). “These caps do that because they give the legislature the authority to ratchet the caps back down.”
Given that the legislature has no history of reducing taxes, however, DelGrosso predicted that the sales tax would be jacked up to 15 percent as soon as lawmakers convene in January 2014.
“It’ll be set at 10 percent for one day, then after Jan. 1, the legislature after that one day will have the ability to raise this back up to 15,” said DelGrosso. “To think that once this is already set at 15 percent that it’s ever going to lower is basically not going to happen.”
State Rep. Jenise May (D-Aurora) insisted that Democratic legislators have the discipline to resist tax increases.
“I think this body has the ability to regulate itself, that we don’t have to spend everything we bring in,” said May. “Now I have that ability. I’m sorry if the rest of you don’t, but I do.”
State Rep. Dan Pabon (D-Denver) praised the amendment as a compromise aimed at giving the legislature “maximum flexibility,” but state Rep. Frank McNulty (R-Highlands Ranch) blasted the proposal as another effort by the Democratic majority to exclude Republicans.
“This is not a compromise. A group of Democrats huddling over in the corner, coming up with language they’re going to offer, is not compromise,” said McNulty. “Well, perhaps that is a compromise. I just call that the Democratic agenda.”
The problem is that legislators are in uncharted territory when it comes to costs, given that no state has ever enacted regulations legalizing marijuana. A study released last week by Colorado State University found that the excise tax alone may not be enough to cover the costs of regulation.
The Amendment 64 campaign released a Public Policy Polling survey Friday showing that 77 percent of those polled said they would support a 10 percent sales tax to cover marijuana-regulation costs.