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 tax, which went into effect on May 1, 2012, applies to paper bags, but only to those bags distributed by grocers. Plastic bags are banned. Like a sales tax, grocers collect the tax from customers and remit the proceeds to the City of Aspen. 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.
CUT alleges that its members should have been allowed to vote on the $0.20 tax Aspen imposes on each disposable carryout bag grocers provide to their customers and seeks declaratory and injunctive relief and an order requiring refund of all revenues collected, along with the payment of interest, as required by TABOR.
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.
On August 21, 2012, MSLF filed a complaint in Pitkin County District Court on behalf of the Colorado Union of Taxpayers Foundation (CUT) against the City of Aspen and its City Council, alleging that the bag tax violates TABOR. On October 15, 2012, the parties commenced discovery.
On March 21, 2013, MSFL filed a motion for summary judgment on behalf of CUT, and on April 11, 2013, the defendants filed a cross-motion for summary judgment and a response to CUT’s motion for summary judgment. On May 2, 2013, MSLF filed CUT’s response and reply brief. On May 16, 2013, the defendants filed their reply. On May 23, 2013, MSLF requested oral argument on behalf of CUT.
On August 6, 2014, the district court held oral arguments. On August 11, 2014, the district court issued an order granting Aspen’s motion for summary judgment upholding the bag tax. On October 2, 2014, on behalf of CUT, MSLF filed a notice of appeal and on February 20, 2015, filed CUT’s opening brief. On March 19, 2015, Aspen filed its response brief. On April 20, 2015, CUT filed its reply brief. On September 30, 2015, oral argument was held before the Colorado Court of Appeals. On November 5, 2015, the Court of Appeals affirmed the judgment of the district court. On November 18, 2015, CUT filed a petition for rehearing. On April 14, 2016, the Colorado Court of Appeals denied the Petition for Rehearing. On May 12, 2016, on behalf of CUT, MSLF filed a Petition for Writ of Certiorari with the Colorado Supreme Court. On September 6, 2016, the Colorado Supreme Court granted the petition.