Funny thing about this time of year when it happens to be an election year.  First I start noticing news 'stories' about the tough times local government is having because the current tax revenues are falling short of what is needed to meet the 'planned' budget for the rest of the fiscal year.  Typically there are 2-3 scare stories about the reduction in police or fire services unless the govt can cut funds from other places.  These are usually followed up with more 'news' about the inability to fix roads or deliver 'other' government services like buses (buses are HIGHLY subsidized here in Colorado Springs).

Last night, now that we tax-payers have been properly scared by the 'news', I saw this on my local FOX news.  Surprise, surprise, county and city sales tax revenues are down this year.  Governments solution...lets not reduce spending, lets raise taxes HIGHER!!!

Thinking about that for a moment.  Gas has gotten really expensive, so have groceries and things people need to survive.  Hence, luxury spending is down.  So, lets raise the sales tax 1% so that the tax rate in Colorado Springs will be 8.4% (high even by New York standards), and a staggering 9.8% in Manitou Springs. 

That is $1 for every $10 spent.

If the voters are foolish enough to vote for this tax increase in November, it will impact everything from tourism to people considering relocating to the county.  8-10% in Sales Tax is extreme especially when levied on top of the already seen 2-4% increase in the cost of things in general.

It will be on the shoulders of the other anti-tax lobby groups to advertise and educate the voting public.  One might think its an issue that wouldn't stand a chance, but the number of times that Colorado voters have allowed tax increases or allowed the government to keep TABOR refunds for repeated 'road improvements' -- for the amount of revenue collected in Colorado we should have streets of gold. 

Hand it to the government though.  People seem to respond to the threat of crap roads, so let's say a tax will go for road improvements but tuck it into the 'general' fund.

Voters in El Paso County need to get educated.  The city of Colorado Springs now nearly extends all the way to Falcon due to the Banning Lewis Annex.  The city tries to run subsidized bus service from Falcon to Manitou, yet won't charge those who actually ride the bus a fare high-enough to make it self-sustaining.

Raising the sales tax 1% this year will only lead to the governments spending more money on wasteful things (and probably giving themselves 3% pay raises next year.

Vote NO on new taxes!

 

 
This post has been included in Colorado Information El Paso County, CO Information

8 Comments on Warning...Colorado Springs Sales Tax Increase possible in 2008

SEP
21
2008

My question to the author is this:

With rising costs to run the government in its current state and no increase in income for that government how would you suggest that we receive the same level of service? our mill levy is remarkably low, I challenge you to find a major metropolitan county like El Paso that has as low a property tax and compare their standard of living with that of Colorado Springs. I am not excited about the prospect of paying more, but, I also do not want to give up essential services and things that I think make this community safer. So my question to you is What do you give up, a very small amount now or a level of service that you find safe?

For those that think that %1 is a high amount look at this:

if you make $48,000 a year take home or $4,000 a month after income tax, and other monies taken out of your check how much of it are you spending on taxable items?

Let's say that your mortgage is $1,600 a month, Utilities arde $250 a month, Car Payment is $350 a month, Insurances for house and vehicle are $150 a month, Fuel for your car is $300 a month, that total is $2,750 leaving $1250 a month to spend on groceries and other necessities. I spend approximately $500 at the grocery store of which 80% is food and not taxed so of my montly grocery store bill it will increase by $1 a month, thats ok. I am not out buying Televisions and New Vehicles but I do spend a reasonable amount each month on taxable items so lets say of this I spend $350 on other expenses and save the remaining $300 on going out with my wife and incidnetal charges, paying for dinner and services. so of my hypothetical $4,000 monthly income I am spending $100 on taxable groceries and $650 on taxable goods. I think that both these numbers are high but for this instance it made for easy math. so my estimated cost using this hypothetical is $7.50 per month, or $90 a YEAR! that is a small price to pay for more cops to respond to criminals breaking into houses, more health service workers to check our resturants, more bed space to hold those that representatives you elected have deemed need to be incarcerated for their crimes against society and a safer and better place to live for all.

I would imagine that if you don't take home $48,000 a year (god knows I don't) that this $90 would be much smaller.

I guess it all boils down to Taxes are the price you pay for a civilized society, how much is it worth to you? $90 a year aint that much.

So... What would you do?
12:25am • #1

Being from the East Coast and now living in Colorado Springs, I don't argue that the government has to provide essential services and I agree that the costs for services does increase over time especially when an area sees continued growth like the Springs. 

I have not lived in an area with as low property taxes as we have in Colorado.  It is appalling as a parent to see communities so adverse to provide decent school facilities or to build new fire stations in their neighborhoods.  I for one was pleased when D49 property tax increases were approved a few years ago to build a new Falcon High School.  The trickle down allowed for improvements at the Middle School level on down.

It is my own opinion that property taxes are a much more stable basis to budget from because they are not as subject to economic ebbs and flows like sales taxes are.  Further, I believe that new growth should be 'self supporting' in that the prices of lots for new build and the associated property taxes for each new house built should support from day 1 the building, staffing, maintaining of schools, utilities, and fire/police services.  Buying a house that way prevents having new communities like Banning Lewis get well underway without funds to actually build schoos, build police substations or fire stations, etc..  Then having to ask voters for a tax increase later is an up hill battle. 

(Whether I think Banning Lewis should have been Annexed to Colorado Springs or not is a different question...When I moved here, the Springs ended at Powers in some places, Marksheffel in others, now "Colorado Springs" exends to Hwy 24 in places!)

I think there is disagreement on what constitutes 'essential' services.  I for one do not think the Bus system should be subsidized by tax payers.  The fares paid by the riders should be sufficient to operate the service.  I also believe that it is disgusting when a news story is presented on TV that pairs up a requested sales tax increase with the threat of cutting police or fire services.  Such scare tactics are just wrong.  Citizen safety should be protected first and all other things cut first.  Maybe City Council should be cut down to 6 months with requsite cuts in salaries?  It also annoys me as a tax payer to repeated be asked for a fraction of a percent sales tax increase (or for the govt to keep my TABOR allowance) to pay for the same things year after year.  How many times has there been a request for such things to fund 'new road projects'?  That got approved several years ago and the request for more never ever acknowledges that....as if the people won't remember?

I am no economist.  I've never lived anyplace under a TABOR type law where the amount the government can receive/spend is limited by the prior years budgets. That takes some getting used to.  It has its merits however and protects the people from sudden spikes in government taxes and possibly deficit spending.  I believe that sales taxes impact the people more than property taxes.  Raise taxes higher, give people more incentive to drive outside of city limits to shop.  Why pay 8% tax at Walmart on Woodmen/Powers when I can just drive out to Falcon?  But its much harder on small business owners.  I also believe that there are appropriate uses for sales taxes, and inappropriate.  Core government services will ALWAYS be budget constrained in down economies so long as their main funding source is sales tax. 

If the sales tax was raised up to 10% sure enough the budget would grow to provide the amounts of services that tax revenue could support.  Hire more police and firefighters, build more roads, etc.  But then a dip in the economy will still lead to a reduction in revenues to support all of those 'good' things.  Funding based off of PROPERTY TAX is much more stable, is more equitiable because the more you spend on your house, the more you'll proportionally spend on property taxes.  The lower income people who either rent or buy lower priced houses would pay much less than the upper income folks.  Lower income people are much more greatly affected by higher sales taxes than upper when the tax is across the board on all goods.

Colorado Springs was some what limited in its impact to the real estate bubble of the 2000s because prices here never really shot up that dramatically.  Hence they didn't have much to drop when the bubble burst.  Prices had fallen due to the mortgage problem that followed, but on a city wide averaged level, the percentage drop that would have been felt in the following years adjusted property tax revenues would have been more gradual and of a lower percentage over all if you compare it to the sales tax revenue drop.

As I said, this is what makes sense to 'me'.  I'm not an economist, but I have lived in many places.  Some with very high property and sales taxes (New York) and more reasonably taxed areas (Virginia) and every place governments never have enough money to spend.  Its the nature of the system.

'Nough said......

10:44am • #2

You mentioned things like funding for health inspectors.  Fees for specific governement regulation should first be levied on the particular things being regulated.  Builders fees for inspections by regional building should go up, effecting those that build and buy new houses.  No me, unless I happen to decide to build a new house.  Similarly, health inspector services should be self supporting.  Annual fees (another word for tax really) from ALL restaurants should be levied to fund a sufficient number of inspectors so that a greater percentage of restaurants can be inspected in a given year.  Yes, it would cause restaurants to have to raise the prices of their food a few cents, but again, only effects those who eat out.  Not a tax on me if I only ever eat at home.  If I go out to eat, and want peace of mind that the place is sanitary, I should be willing to pay an extra few dollars on my bill for that peace of mind.

I'll not touch the new jail or the inequal incarceration rate for various criminals...that's an issue all on its own!  ;-)

Oh I forgot....
10:52am • #3

Such interest in my Blog!!!  Yayyy!!  Being from England, so much of the US system is still new to me.  While we have VAT taxes at point of sale and council taxes on property to pay for most other services, the fact that governements never seem to have enough money is universally the same.  Be happy there's no NHS (National Health System) here which has a very large appetite for taxes to keep it running.

 

1:39pm • #4
SEP
27
2008

 The El Paso county jail has been full for several years. So full that last year It was released to the public that the County Jail will no longer accept misdomeanor arrest. Now the jail will have to close at least 144 beds and stop accepting misdomeanor and some Felony arrest. There is no punishment for criminals and no place to put them. I know of rapist, child molesters and burglers that are free in our community because of lighter sentences due to no space in jails and prisons. The same people come back to jail over and over agian commiting the same offenses again and again. We need to take back our community.

If 1A passes the jail will add 800 beds to house offenders and keep them of the street and increase the number of patrols to respond to the calls for service. What person in thier right mind would vote to let scumbags walk thier streets and reduce public safety?

Jay
10:01am • #5
OCT
21
2008

I am a resident that will be affected by the county sales tax increase.  I believe that the Colorado Department of Revenue Sales Tax Division and other taxing agencies are not doing what needs to be done. On their website it specifically states that all retailers need to hold a valid sales tax license. The definition of "retailer contractor" for Colorado sales tax purposes is also a retail merchant of building supplies or construction materials, i.e. one who purchases such property specifically for resale, repair work, time and material jobs, as well as lump sum contracts. This includes but not limited to "building contractors, roofing contractors, electrical contractors, plumbing contractors and heating contractors" ETC. This information is listed on the web site under FYI Sales 6 (07/08). After extensive research on this issue I was only able to find a hand full of contractors who actually hold these licenses in the County of El Paso.

Retailer-contractors who make over the counter sales of a complete unit with an agreement for installation of the unit MUST collect sales tax from the purchaser on the sales price of the unit. Such sales are NOT building contracts they are RETAIL SALES. The Term "unit" includes stoves, refrigerators, furnaces, air conditioners; washing machines ETC. Installation charges (Labor and permits) are not taxable as long as they are listed separately on the invoice.

 On page 2 of Sales 6 it states" The purchases made by the retail-contractor that are later sold as a part of the sales business will be subject to standard sales tax laws and regulations, and are subject to tax on the full selling price INCLUDING ALL MARKUP CHARGES passed on to the buyer." These purchases must be remitted to the state as state and other sales tax on line 10 of the "RETAIL SALES TAX RETURN".

 What in turn this means is if the contractor you are hiring pays $25.00 for a part, he pays $1.85 tax in Colorado Springs to his supplier. You as the consumer will not be paying $25.00 for that part. Your contractor will mark up the price and charge you tax on the marked up price. So if your contractor charges you $85.00 for the part that means the additional sales tax you are being charged is $4.44. That money is not being turned into the state or the other taxing agencies on the sales tax form. Labor or types of building permits are not taxable!

 A misconception of contractors is to charge the customer the "LABOR" for the whole amount except the price that has been taxed. Example;

 Consumer A   purchases a new roof. The contractor bids the job at 1800.00 total. He does not break down the bid to Consumer A.

 Consumer B   purchases a new roof. The contractor he hires breaks down his bid to include materials $800.00, labor $900.00, and a permit $100.00. The contractor holds a sales tax license and purchased his materials tax free. He in turn will remit the tax on $800.00 to the proper taxing agency.

 Consumer A contractor will call all but the amount he has paid on tax, labor and owe nothing. The consumer was charged an up charge and was not even told.

 If you as a consumer received a bill for $500.00 from your contractor for a part for your water heater, would you question that bill? If he charges you $15.00 for the part and $485.00 for labor would you pay that bill? I WOULD NOT! Mark up is a part of everyday lives; we all pay it, but why do the contractors not have to pay their tax on mark up?

 Another misconception about sales tax is that if you live in UNINCORPORATED EL PASO County your sales tax rate is 4.9%. Your contractor is paying 7.4% if he/she purchases his supplies in Colorado Springs. Is he paying the difference or is he passing the additional tax on to you? The retail sales tax license allows contractors to purchase their supplies tax free so that they pay the right amount of sales tax based upon the area the contractor is doing the work in and the "Marked up Price".  The residents of El Paso County need to be made aware of this prior to the election. If the Colorado Springs City Council now has people investigating unpaid sales tax then there obviously is a problem.

 I truly hope the people of El Paso County are made aware of this problem soon. Call the Colorado Department of Revenue and ask how many tax licenses have been issued to contractors in El Paso County and how many are actually filing sales tax returns. Get a phone book and compare how many companies do not have this license though they are required by law as a retailer. Call some contractors who hold valid sales tax licenses and pay their sales tax the right way. Investigate this further.

 I will be voting no on any more sales tax!!

Char
7:40pm • #6

Wow!  That is an interesting comment indeed!  I had not thought about that particular aspect.  I know that as a home Stager, providing a 'service' there is no sales tax involved.  But should I have to purchase something for the home owner, I can make the purchase tax free, but then have to pay tax on whatever the home owner pays me for the item.  An easier approach would be to pay tax, provide receipt to the home owner and be reimbursed.  Tax man gets his due and less complicated all around.  That assumes its a direct reimbursement without any mark-up.

I can imagine the county is missing out on a LOT of revenue by the examples you cited.  Not sure how it could be policed, probably not very easily especially for cash transactions. 

THANK YOU SO MUCH making such a thorough comment!  That could have been a blog post in its own right on the new sales tax Ballot Item 1A for this years election!

 

9:45pm • #7
OCT
22
2008

You are welcome. I can only hope that this is presented to the tax payers before the vote.  The county has lots of ways that they can police this. Through the permits required by PPRBD and through the supply houses. Also to require that all contractors are remitting this tax through random audits on contractors. All retailers are required to hold a sales tax license and not all of them do. Why are they not enforcing this?  I am fully for funding the police and fire departments, but why should we as citizens pay even more in tax because some are not paying what they are required by law to!

Char
2:03pm • #8

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Sassy Skelton

Colorado Springs, CO

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Staged Right Professional Home Staging Colorado Springs

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