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Colorado Taxpayers Appear at Colorado Supreme Court in Aspen Bag Tax Appeal

Jun 07, 2017 | by William Perry Pendley

DENVER, CO.  A Colorado nonprofit, public-interest group that educates citizens on the dangers of excessive taxation, regulation, and government spending and protects their right to petition government today argued its case at the Colorado Supreme Court following the court’s decision in September of 2016 to review the ruling of the Colorado Court of Appeals that upheld the constitutionality of a bag tax imposed by the City of Aspen.  The Colorado Union of Taxpayers Foundation (CUT) was represented by attorney Steven J. Lechner of Mountain States Legal Foundation (MSLF).  Earlier, a three-judge panel ruled against CUT in November of 2015 and the full court denied its motion for a rehearing in April of 2016.  CUT challenges the August of 2014 decision by a Colorado district court, which ruled that the assessment is a fee, not a tax; therefore, it does not violate the Colorado Constitution’s Taxpayer’s Bill of Rights (TABOR).  In its lawsuit filed in Pitkin County District Court in 2012, CUT alleged that under TABOR its members should have voted on the $0.20 tax on each disposable carryout bag Aspen grocers provide to customers, which tax went into effect in May of 2012, applies to paper bags, is collected from customers, and then, like a sales tax, is remitted to Aspen.  CUT filed its opening brief with the Colorado Supreme Court in October of 2016.

“We hope the Supreme Court will agree that purposes of Aspen’s bag charge demonstrate that the charge is a tax, rather than a fee, and is subject to TABOR’s voting requirements,” said William Perry Pendley, MSLF president.  “We also hope the Supreme Court will reverse its past rulings that require the judiciary to defer to the other branches of government in questions of constitutional interpretation, such as TABOR.” 

In October of 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.

For more information:  Colorado Union of Taxpayers Foundation v. City of Aspen

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