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i_taxtask_2017a_2017-07-11t10:06:11z7 Hearing Summary

Date: 07/11/2017

Location: RM 271

Final

Overview from Cities



SALES AND USE TAX SIMPLIFICATION TASK FORCE


Votes: View--> Action Taken:
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01:33 PM -- Overview from Cities



The task force came back to order following lunch.



Municipal representatives from the task force, including Steve Ellington, Kristin Baumgartner, Dianne Criswell, Bryan Archer, and Heather Pezzella, presented the task force with information related to the sales and use tax system from a municipal perspective. A copy of their presentation can be found in Attachment D.



Attachment D.pdfAttachment D.pdf



Part one of the presentation included a discussion of the basis of authority for the self-collection of sales taxes; revenue sources for municipalities including sales and property taxes and the impact of the Gallagher Amendment and TABOR on municipalities; the reliance of Colorado municipalities on sales tax revenues as compared to property taxes;



Part two of the presentation included a discussion of the proliferation of exemptions from the state sales tax base; the 2015 audit that was discussed previously and the benefits of local tax administration versus being administered by the Colorado Department of Revenue; and the impact of changing the sales tax base on current bond covenants.



Finally, part three of the presentation included a discussion of past simplification efforts, including an update on the extensive process involved in the standard definitions project initiated by Senate Joint Resolution 14-038. In response to the joint resolution, the Colorado Municipal League established a 23-member steering committee and subcommittees to address definitions in the tax code. Definition drafts were compared with earlier and similar standard definition efforts, and were reviewed by attorneys, the business community, and municipalities collecting their own taxes.



During the presentation, Ezequiel Vasquez, Revenue Manager for the City of Arvada, spoke about his experience working on the standard definitions committee and the process involved in drafting the standard definitions, including making sure that the net effect of the changes was revenue neutral.




The panel provided a progress report on the adoption of the standard definitions. Currently, 13 home rule municipalities have adopted the standardized definition ordinances. The panel discussed strategies for getting the remaining home rule municipalities to adopt the standard definitions. The panel also encouraged the state to adopt the standardized definitions as well. The task force discussed the potential for standardized matrix across all municipalities using the standardized definitions where the municipalities identify whether the item is taxed or not in a standardized form. The task force also discussed the potential for legislator involvement in working with the municipalities in adopting the standardized definition ordinances.



The task force requested a presentation on bond covenants at a future meeting.



The “Sales Tax Simplification Model Ordinance” definitions can be found here: https://www.cml.org/issues.aspx?taxid=11113.