Case Summary
Issue:
Whether a governmental entity can circumvent the Colorado Constitution’s Taxpayer’s Bill of Rights (TABOR) by labeling a tax a “fee?”
Plaintiff:
Colorado Union of Taxpayers Foundation
Defendant:
City of Aspen and Mick Ireland, Adam Frisch, Torre, Steve Skadron, and Derek Johnson, all in their official capacities as members of the Aspen City Council
Join the Fight
Since 1977, MSLF has fought to protect private property rights, individual liberties, and economic freedom. MSLF is a nonprofit public interest legal foundation. We represent clients pro bono and receive no government funding. Make your 100% tax deductible contribution today and join the fight.
Case History
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.
