Colorado Voters to Deciding on Keeping Excess Tobacco Tax Revenue
As Colorado voters fill out their ballots, one of the issues they will be deciding on is Proposition II, which the state seeks to keep $23.7 million in excess tax revenue collected from tobacco and nicotine products.
This proposal, if passed, could have major implications for the state's budget and its future tax plans.
Proposition II is a result of the passing of Proposition EE three years ago, where Colorado voters approved increases in the prices and taxes for tobacco and nicotine products. If Prop. II fails, these future increases would be negated, and the taxes on these products would decrease.
But why is this important?
According to the Taxpayer's Bill of Rights in the state constitution, any excess tax revenue collected must be approved by voters before it can be spent by the government. This is why Proposition II is on the ballot, as the state collected $23.7 million more in taxes than initially forecast.
If passed, this proposition would allow for the scheduled increases in taxes on nicotine and tobacco products to continue. This means that the tax on a pack of cigarettes would increase by 31%, from the current rate of $1.94 to $2.54 by July 2027. Additionally, the minimum price for a pack of cigarettes would also increase by 50 cents to $7.50 starting in July 2024.
Taxes on other tobacco and nicotine products would also see an increase, rising to 62% of the listed price from the current rate of 50%.
This increase in taxes would bring in an estimated $32.1 million in new state revenue for the 2024-25 budget year, with a large portion of it going towards the state's tuition-free preschool program. This program has been touted as a major benefit for Colorado families and has received widespread support.
On the other side of the proposition, if it fails, the state would have to find a way to refund the excess revenue to taxpayers and lower the tax rate on tobacco and nicotine products by 11.5% to prevent any future overages. However, this could have a negative impact on the state's budget and potentially lead to cuts in other areas.
READ MORE:
PROPOSITION II: ASK VOTERS TO LET GOVERNMENT KEEP OVERTAXING
COLORADO WOULD BE ABLE TO KEEP ALL THE TOBACCO, NICOTINE TAX REVENUE
Ultimately, the decision on Proposition II will have a significant impact on the state's finances and its future plans for tobacco and nicotine taxes.
Colorado voters will have to weigh the potential benefits of keeping the excess revenue versus the potential consequences of rolling back tax increases. It's a decision that should not be taken lightly and could have a lasting impact on the state's economy.