Flexible marijuana tax rates — Progress in Denver

Denver’s City Council is considering a proposal that would give it flexibility to adjust marijuana tax rates – within limits – from time to time, as needed.  More of that kind of flexibility, and legalization might work out — that’s my opinion.  Prices may well be too high at first, as a start-up industry struggles to meet a blip in demand, and too low later, as economies of scale kick in.

My objection to percentage-based taxes  fades a little when they are flexible rather than fixed.

See the bolded language below.

“SHALL CITY TAXES BE INCREASED BY [$3.25 MILLION] ANNUALLY IN THE FIRST FULL FISCAL YEAR AND BY SUCH AMOUNTS AS ARE RAISED ANNUALLY THEREAFTER BY IMPOSING AN ADDITIONAL SALES TAX OF 2.5% ON THE SALE OF RETAIL MARIJUANA AND RETAIL MARIJUANA PRODUCTS, WITH THE TAX REVENUES BEING USED TO FUND THE ENFORCEMENT OF REGULATIONS ON THE RETAIL MARIJUANA INDUSTRY, OTHER COSTS RELATED TO ENFORCEMENT OF MARIJUANA LAWS, EDUCATION AND PUBLIC HEALTH PROGRAMS ASSOCIATED WITH MARIJUANA CONSUMPTION INCLUDING PREVENTION OF UNDERAGE CONSUMPTION, AND OTHER CITY EXPENSES, WITH THE RATE OF THE TAX BEING ALLOWED TO BE INCREASED OR DECREASED WITHOUT FURTHER VOTER APPROVAL SO LONG AS THE RATE OF TAXATION DOES NOT EXCEED 10%, AND WITH THE RESULTING TAX REVENUE BEING ALLOWED TO BE COLLECTED AND SPENT NOTWITHSTANDING ANY LIMITATIONS PROVIDED BY LAW?”

From the article:  The Amendment 64 Committee is chaired by councilman Charlie Brown, with Mary Beth Susman serving as vice chair. Other members include Chris Nevitt, Albus Brooks, Jeanne Faatz, Chris Herndon, Jeanne Robb, Robin Kneich, Paul López, Judy Montero, Debbie Ortega, Peggy Lehman and Susan Shepherd.

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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