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Colorado Taxpayers Rebut Arguments on Aspen's Bag Tax

May 02, 2013 | by William Perry Pendley

DENVER, CO.  A Colorado nonprofit, public-interest group that educates the public on the dangers of excessive taxation, regulation, and government spending and protects citizens’ right to petition government today responded to arguments filed with a Colorado state court by the City of Aspen on whether it and the five members of its City Council violated the Colorado Constitution’s Taxpayer’s Bill of Rights (TABOR).  Colorado Union of Taxpayers Foundation (CUT) alleged in a lawsuit filed in Pitkin County District Court in August 2012 that its members should have been allowed to vote on a $0.20 tax imposed on each disposable carryout bag Aspen grocers provide to customers.  The tax, which went into effect in May 2012, applies to paper bags, but only to those bags distributed by grocers.  Plastic bags are banned.  In its brief, CUT argued that, like a sales tax, the bag tax is collected by grocers from customers and remitted to Aspen.  CUT seeks declaratory and injunctive relief and an order requiring refund of all revenues collected and payment of interest, as TABOR requires.   

“That Aspen passed the bag tax to fund its government programs is inescapable; as a result, the tax violates TABOR,” said William Perry Pendley of Mountain States Legal Foundation (MSLF); MSLF represents CUT.

In October 2011, the Aspen City Council passed a “Waste Reduction Fee,” similar to taxes imposed by Telluride, Carbondale, and Basalt, to collect a 20 cent tax on each disposable carryout bag grocers provide to customers.  The City Council was urged to enact the tax because, “Aspen considers itself an environmental leader and this topic presents an opportunity for Aspen to continue to take a progressive stance on environmental issues.”  During the first year of the tax, grocers may retain a portion to inform customers about the tax, train staff about the tax, and alter infrastructures to accommodate the collection of the tax.  Revenue from the tax funds general expenses of Aspen government, including public educational campaigns, infrastructure, pollution-reduction equipment, and community cleanup events. 

The City of Aspen attempts to circumvent TABOR by calling the tax a “fee”; however, the Colorado Supreme Court has held that nomenclature does not control and that a tax is subject to TABOR if its purpose is to raise revenue for general governmental spending.  A fee is charged to individuals who use a service; a tax funds the general expenses of government.

The impact of bag taxes is significant.  Research by the Beacon Hill Institute and Americans for Tax Reform found that Washington, D.C.’s bag tax cost at least 100 jobs and resulted in a $5.6 million drop in aggregate disposable income. 

Mountain States Legal Foundation, created in 1977, is a nonprofit, public-interest legal foundation dedicated to individual liberty, the right to own and use property, limited and ethical government, and the free enterprise system.  Its offices are in suburban Denver, Colorado.