DENVER—A citizens’ initiative filed May 10 with the Denver Clerk and Recorder proposes to cap Denver’s aggregate sales and use tax rate at 4.5% and requires the city to reduce other sales and use tax rates whenever Denver voters approve a new tax, to keep the total below the new cap.
Garrett Flicker, the new Chairman of the Denver Republican Party, filed the initiative. Flicker, 25, elected in February, is the youngest Denver GOP Chairman to serve.
“The sales tax cap is is fairly straightforward,” said Flicker in an interview with Complete Colorado. “In Denver every time an election cycle goes by, they have to raise the sales tax on something for something. And it seems like it’s unending and truthfully, it’s becoming harder and harder to live in Denver as a result of ever-increasing taxes.”
Taxes keep going up
At the November 2020 general election, for example, Denver voters approved Measure 2B, which increased the sales tax by 0.25% (2.5 cents on a $10 purchase) to fund services for homeless people. The increase went into effect January 1. It is expected to raise about $40 million per year for the city’s Homelessness Resolution Program, and will likely cost each household about $5.25 per month.
Voters also approved a 0.25% increase in sales and use taxes, also starting January 1, to garner another $40 million “to fund programs to eliminate greenhouse gasses and air pollution; and adapt to climate change.”
The measures increased Denver city sales and use tax rates–not including the 1% Regional Transportation District (RTD) and 0.1% Scientific and Cultural Facilities District (SCFD) taxes–to 4.81%, or 48.1 cents on a $10 purchase.
The initiative is for a new ordinance, not for a city Charter amendment, which in theory means that the Denver City Council can change or even repeal it the moment it’s passed.
On top of Denver’s high sales tax rates, the city expects to collect an estimated $14 million in new tax revenues in 2021 thanks to a 2018 U.S. Supreme Court ruling that allows cities and states to collect sales taxes on internet sales by vendors located outside the state.
Colorado state government has collected more than $100 million in new sales taxes under the ruling since it began collection in 2019.
This year is the first year Denver is collecting these taxes.
Neither Denver nor the State asked voters for permission to collect this additional revenue, which is required under the Taxpayer’s Bill of Rights (TABOR) says Ben Murrey, fiscal policy director at the Independence Institute in Denver, adding that through confusing and arguably deceptive language and convoluted reasoning, the city is increasing its tax revenues by giving taxpayers the idea that the new revenues are coming from online companies, which is not accurate.
“Clearly, the drafters of the city budget bent over backwards to avoid telling Denverites the truth: the city has found a way to increase sales taxes by millions of dollars annually without voter consent,” Murrey wrote in a March 12 article published by the Independence Institute.
The online companies collect the new sales taxes paid them by consumers and remits them to the Colorado Department of Revenue through the Sales and Use Tax System (SUTS), created by the state legislature to help ease the burden on out-of-state retailers. SUTS accepts remittances by sellers and forwards the requisite amounts to the local jurisdictions like Denver that impose such taxes.
But the taxes are always paid by the consumer, not the seller.
Reviewing past tax hikes
“I think it is a problem that the city doesn’t ever revisit it to justify the tax increase later on,” Murrey told Complete Colorado. “They don’t say, ‘Years ago, when we asked your permission to raise your taxes, here’s what we’ve done and you got your money’s worth.’ That review never seems to happen.”
Murrey thinks that if passed, this ordinance would create a review of past tax increases because the city would have to choose which of them to repeal in order to stay under the new 4.5% cap.
“I think that this forces Denver to take a close look at sales tax increases from the past several years and look at where the money they’ve gotten is effective and useful and that it is actually solving a problem.” Murrey continued. “This would cause the City of Denver to take a close look at that and evaluate it and cut the programs that aren’t working.”
Petitions are due July 5, and Flicker told Complete Colorado Sunday that support is strong.
“Signature gathering is going very, very well,” said Flicker.“I have tons and tons of messages from life-long Democrats saying that they support this initiative.”
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