Elimination of select tax exemptions clears state House

The state would collect more than $118 million a year in additional revenue by eliminating various tax exemptions if eight measures that cleared the Colorado House on Monday become law.

The measures either suspend or permanently eliminate tax exemptions on such items as candy, soda, alternative fuel and computer software.

Majority Democrats said the bills were a necessary evil, but Republicans warned they might backfire and lead private companies to cut jobs, resulting in few dollars coming into the state’s coffers.

“This bill is not going to work in the way it says,” Rep. Laura Bradford, R-Collbran, said of one of the measures. “We’re going to put people out of jobs, and there’s not going to be any revenue.”

Democrats are trying to get the measures approved and signed by Gov. Bill Ritter before March 1 so the state would be able to get about $18 million in increased revenue to close a shortfall for the current fiscal year, which ends June 30.

House Democrats said their GOP counterparts were making more of the exemptions than they deserve.

They said some of the additional revenues are only temporary for some and deserved to be eliminated for others, such as computer software sellers that got a special tax break during Republican Gov. Bill Owen’s term that was neither approved by the Legislature nor voted on by taxpayers.

“The definition of ‘exempt’ is to free from an obligation or a duty required of others,” Rep. Michael Merrifield, D-Manitou Springs, said. “This is an attempt to spread the pain fairly across the spectrum. I’m thinking of the thousands of students ... and the hundreds of developmentally disabled and mentally ill who’ve already suffered cuts.”

The exemptions include removing the state’s sales tax break for candy and soda, direct mail advertising, out-of-state online sales, materials used by farmers and ranchers and fuel consumed for industrial purposes, such as manufacturing, construction and mining.

Rep. Kathleen Curry, I-Gunnison, offered some harsh words for her former Democratic colleagues, saying they had it all backwards.

“We put the revenue first, and we haven’t done the expenditures yet,” Curry said. “If we still can’t make this thing work, then we go with our hands out to the taxpayers, but not first. We’re in the third week of session, and we spent an entire week talking about how to bring in more money. We haven’t even had the conversation yet about how to spend less.”

Democrats immediately struck back, saying one of the first votes during the session was a $130 million cut to public schools, which came on top of more than $2 billion in cuts over the past two years.


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