By Debi Brazzale, COLORADO NEWS AGENCY
When it costs more to collect a tax than the money collected, it may be time to eliminate that tax, says Amendment R, a measure referred to the November statewide ballot by the legislature.
Amendment R asks voters to let counties not collect taxes on portions of federally owned property that is leased by individuals or businesses. Currently, the tax is assessed on those individuals or businesses leasing federal lands under a provision in the tax code called possessory interest tax. It is paid to counties based on the taxable value of the portion of the property that is being utilized by the lessees.
Federal lands are often leased by farmers and ranchers for grazing purposes; they typically pay less than $6,000 a year to use the land resulting in a tax that is far below the county’s administrative fees, says Rep. Randy Baumgardner, R-Hot Sulphur Springs, the sponsor of House Concurrent Resolution 1005, the legislation that placed the issue on the ballot.
“We went for the smaller end ($6,000 or less),” said Baumgardner noting that the counties will still receive revenue from leases that are above the $6,000 threshold.
Baumgardner said that the issue of the tax was initially brought up by constituents who felt they were being unfairly taxed.
“The folks that were leasing the federal lands were saying they didn’t feel they should be paying tax on land they didn’t own,” said Baumgardner.
Meanwhile, the counties were finding that they were spending over $100 in administrative fee to collect as little as 40 cents. According to Baumgardner, the counties came and told lawmakers that they were in favor of the measure in light of the upside-down position they found themselves in through collecting the tax.
In order for a measure to be placed on the ballot by the legislature, it must pass with a two-thirds majority vote in each chamber rather than a simple majority. Lawmakers met the two-thirds threshold despite the handful of Democratic lawmakers who voted against the proposal.
Among those who voted against HCR 1005 is the Democratic chairman of the House Agriculture Committee, Rep. Randy Fischer, of Fort Collins. Fischer said today that while he doesn’t fully recall the debate on the issue, he stands behind his vote based on the premise that no one should be exempt from taxes they owe.
“Just because a tax bill is small, it doesn’t necessarily justify its non-payment,” said Fischer. “Everybody has to pay their property tax, their specific ownership tax, and other things, and we shouldn’t give this type of a break to someone who receives a private benefit from the use of government land.”
Baumgardner says that exempting the farmers and ranchers from the costly collection of the tax by the counties is a win-win for both the counties and for farmers and ranchers.
“We’ve been taxed and fee’d, and people are getting tired of tax increases and fee increases, and this is just one way to help the farmers and ranchers, especially since it will actually save counties money,” said Baumgardner.