The Colorado House of Representatives gave final approval today to a host of tax increases on everything from soda, to candy, to software, to online purchases, to energy, and more.
Not only will these tax hikes delay economic recovery in Colorado, they will not close the state’s deficit. For example, the House voted today to impose the state’s sales tax on online purchases from out of state retailers. Commonly referred to as “the Amazon tax,” this measure will not generate the projected revenue and will, in fact, have a negative impact on state coffers. Rhode Island passed affiliate nexus tax legislation last year, yet the RI House Finance Committee projected it would generate zero dollars due to legal and enforcement issues and the state’s Division of Taxation confirmed as much. North Carolina passed similar legislation last year. The result there was that online retailers cancelled all contracts with affiliates in the state, contributing to a decline in state income tax revenue.
Equally egregious as the adverse economic effects of this legislative monstrosity is the fact that it is being rammed through in direct violation to the state constitution’s Taxpayers Bill of Rights (TABOR). TABOR, which has been the law of the land in Colorado since it was passed in 1992, requires that any “tax policy change directly causing a net tax revenue gain” must be subject to a vote of the people. Despite the fact that the fiscal notes for this legislation clearly point out that they raise taxes and will result in a net revenue gain to the state government, Colorado Democrats have no intention to seek voter approval.
These bills now head to the Senate, where debate is expected to begin next week. ATR will continue working with allies and lawmakers in Colorado to defeat this legislative package.