Pot tax holiday = Laughingstock

Colorado’s one-day marijuana tax holiday is a total laughingstock. Marijuana will be exempt from all state excise taxes for one day, September 15. Colorado’s Taxpayer’s Bill of Rights, TABOR, is the reason.  My state is considering a TABOR-like Constitutional amendment.  I’m against it.

TABOR reportedly has a “requirement that the taxes revert to zero” at some point if collections exceeded estimates. (“Think of it as a back-to-school sales tax break, but for stoners.”) Not marijuana taxes, which came in short of estimates, but total state collections.

Tracing that through the statute is beyond me. I’ve read it over and over, and don’t see the “revert to zero” requirement. (I’m licensed to practice law only in North Carolina, anyway.)  But the Christian Science Monitor says it’s there: “Colorado law requires that new taxes be waived and refunded, and that taxes revert to zero, so to comply with these regulations, lawmakers have settled on a one-day tax waiver.” So does Kristen Wyatt, of AP:

DENVER (AP) — Colorado’s unusual tax law is forcing the state to suspend taxes on recreational marijuana for one day.

The sales-tax break on Sept. 16 will shave $20 off the price of a mid-grade ounce of pot in the Denver area, where ounces this summer sell for about $200 before tax.

It’s unusual for a state that has many times rejected sales-tax holidays on things like school supplies, clothing or energy-efficient appliances. Officials say it could cost the state $3 million to $4 million.

“At first I was in disbelief we were doing this,” said Cheri Hackett, who owns Botanacare, a dispensary in the Denver suburb of Northglenn. “Once our lawyer said, ‘No, we really are doing this,’ we started getting ready. We’re thinking there will be huge crowds.”

Hackett is printing signs to alert customers to the holiday and is trying to boost inventory for a one-day crush of business.

Colorado’s Taxpayer’s Bill of Rights requires voter approval for new taxes. In 2013, a year after legalizing recreational pot, voters approved the 25 percent taxes. But the law requires that any new taxes be waived and refunded if overall state collections exceed projections given to voters when they approved the new taxes.

In this case, the pot taxes were projected to raise $70 million in 2014. They actually raised $58 million, but because overall tax collections that year exceeded projections, Colorado must ask voters for permission to keep the money. And to comply with the requirement that the taxes revert to zero, lawmakers settled on a short one-day tax waiver.

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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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