Basalt Considers Pause on Tobacco Tax

Published 1 week ago

on March 12, 2019

ByAngela Garrity

Aspen Daily News reports that the town of Basalt realizes it might have its citizens complaining to the state of Colorado regarding the city’s tobacco taxes in conjunction with the state Taxpayer Bill of Rights (TABOR). The town is considering suspending collecting tobacco taxes beginning April 1 through the end of 2019.

A council meeting on the matter will take place this evening. The temporary tax collecting would pause the $2 increase per pack of cigarettes in addition to the 40 percent collected on other tobacco products, if passed.

Unaudited figures show that the town of Basalt collected $175,568 from the tax just during the last half of 2018. This amount is far more than the town’s initial estimate of revenue that would be generated for a full year. The tax was approved by voters during the April 2018 municipal election and became effective July 1 of last year.

Town Manager Ryan Mahoney recites a provision within TABOR that places limits on government taxation. This requires Basalt to adhere to its maximum estimate of the first full year of the tax collection. This estimate, according to a town staff memo, was $29,162.

Mahoney said the TABOR limitation only applies to the first full year of the tobacco tax collection. Starting in 2020, council members can lift the suspension and keep all the revenue generated by sales of nicotine products.

To estimate the first full year of revenue, he said, Basalt relied on a methodology used by the city of Aspen, which also has to consider how to deal with the over-collection of revenue from its tobacco tax.

“We used the same methodology, and unfortunately, it was just incorrect,” Mahoney said.

He noted that the tax was designed to be a deterrent to tobacco use, not a revenue-generating measure. “Anecdotally, we have heard that the tax has affected some sales,” Mahoney said. “It was meant to be a tax of diminishing returns, and targeted more toward youth, to prevent them from ever starting smoking.”

Read the full article here.

Angela Garrity is a Contributing Writer and Social Media Manager for both Vape News Magazine and CBD Magazine. Contact her at Angela@vapemz.com.

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