By Gene Davis, DENVER DAILY NEWS
Candy, soda, Amazon purchases and select software are one step closer to being taxed after the Colorado senate Wednesday gave its final approval to a group of bills that would suspend or eliminate a series of tax credits or exemptions.
The nine bills are part of Democrats’ efforts to balance next year’s state budget that is facing a billion-dollar-plus shortfall. Republicans have consistently bashed the bills as business-killing tax increases that seek to circumvent the Taxpayer’s Bill of Rights — which requires voter approval on any tax increase — while Democrats say they are making the difficult decisions that leaders need to make in a time of fiscal crisis.
The nine bills would give the state approximately $148 million more revenue next fiscal year. The credits and exemptions comprise 5-percent of the tax credits and exemptions that are currently on the books in Colorado.
“Nobody wants to go down this road, but we have a moral obligation to balance our budget and protect our kids and our neighborhoods,” said a statement from Sen. Brandon Shaffer, D-Longmont. “Last summer we cut over $700 million from the state’s budget and more cuts are in our future. Cutting corporate tax giveaways under these conditions is a reasonable approach to governing responsibly.”
However, outspoken Republicans say the responsible move by the government would be to cut bureaucracy, not to implement so-called tax hikes on businesses. The GOP last week proposed an alternative budget balancing plan that includes a .25-percent reduction in state payroll spending for the current fiscal year, and a 4.4-percent reduction for next fiscal year. The Republican senators said their budget plan would eliminate the need for the bills that passed out of the senate Wednesday
“By cutting budgets one quarter of a percent this year and just over 4 percent next year, we can stave off job-killing, recovery-slowing tax increases,” said Sen. Josh Penry, R-Grand Junction, in a statement last week. “This one’s an economic no-brainer.”
Gov. Bill Ritter spokesman Evan Dreyer said the Republican budget balancing plan looks like something the lawmakers put together on the back of a cocktail napkin without much thought. He pointed out that Ritter’s administration is reducing personnel costs by more than $100 million. Additionally, the executive branch workforce has shed 1,000 employees since the economy started to decline in 2008, according to Dreyer.
“The Senate Republicans fail to grasp the magnitude of the $2 billion shortfall we’ve already closed and the $1 billion shortfall we still face,” he said last week. “We are taking a more balanced, more thoughtful and more strategic approach than their 11th hour proposal.”
But the senate Republican fired back this week, saying that Democrat lawmakers have refused to even consider their budget balancing plan.
“What part of across-the-board spending don’t the Democrats understand,” said Penry.
The more controversial tax increases passed Wednesday include:
— House Bill 1191 would levy the state sales tax on candy and soda. The move is estimated to give the state $3.58 million more to work with this fiscal year, and provide $17.9 million in additional revenue the following year.
— House Bill 1192 would change the so-called loophole created by the 2006 Department of Revenue rule that exempted Internet downloads or load-and-leave software form the state sales tax. Republicans and representatives from a group of software companies say that taxing the “off the shelf” part of “modified off the shelf software” would send high paying jobs out of the state. But supporters say the state tax would merely mirror the tax that most other states implement on such software. The bill is expected to save an estimated $3 million this fiscal year and $20 million next fiscal year.
— House Bill 1193 would force out-of-state online businesses that do more than $100,000 in Colorado to either collect the state sales tax or send a letter to customers detailing their purchases and how much sales tax they owe the state. The business would also have to send a letter detailing how much a Coloradan spent with them to the Colorado Department of Revenue. Colorado Department of Revenue Spokesman Mark Couch said the bill would significantly help the state collect the sales tax on out-of-state Internet purchases.
The nine bills now move to the House.
Distributed by Colorado Capitol Reporters
IN OTHER COVERAGE
Associated Press: The Senate on Wednesday narrowly passed nine bills taxing everything from candy and soda to online sales, energy used in manufacturing and pesticides to balance the budget, despite fears the taxes will cause layoffs. They’re among a package of tax changes proposed by Gov. Bill Ritter to help close a combined $1.5 billion budget shortfall this year and next year. Majority Democrats in the Legislature are rushing to pass them so the state can start collecting the revenue starting next month.