12/17/2009Colorado: 2010 Ballot Measure Would Slash Car Taxes
Drivers would face dramatically lower car taxes if Colorado voters approve a November ballot initiative.
Colorado voters will have an opportunity to decide on dramatic reductions in car-related taxes under a measure that qualified for the ballot earlier this month. Proposition 101, if given final approval in the November 2 general election, would roll back a number of vehicle-related fees and reduce income and telecommunications taxes.
"Proposition 101 was written to be simple, short, fair, and clear, unlike the tax code imposed by politicians," initiative sponsor Jeff Gross wrote. "Our target is to help everyone equally, with a tax reform easy to understand and apply."
The measure's biggest change is the near-elimination of the annual 2.1 percent tax on a car's value. Revenue from this "specific ownership tax" is not spent on road repair but is distributed to the general funds of local governments. The proposition would set the tax at a flat rate of $2 for each vehicle. The measure would also abolish the imposition of taxes on renting a car and replace all registration, title and licensing fees with a maximum charge of $10. Those looking to buy a new or used car would enjoy an exemption on the first $10,000 of the vehicle's value in the calculation of the sales tax.
For example, a driver who purchased a used car for $10,000 would owe a total of $1015 in car taxes under the present system. The proposition would lower that figure to just $11. The owner of a newer, $30,000 vehicle now faces $3130 in taxes, but Proposition 101 would cut that amount to $1212. The measure's proponents argue that slashing the cost of buying and owning a car will encourage residents to upgrade to safer and more efficient vehicles.
"Our petition will help vehicle purchases and accelerate replacement of gas-guzzling, high-polluting cars," Gross explained. "This is a more realistic and practical approach than the wasteful federal 'cash for clunkers' boondoggle."
The proposed changes to the tax rate would be phased in over four years and compliance with the measure would be enforced by an annual state audit. Proposition 101's other tax reforms would decrease the state income tax from 4.63 percent to 3.5 percent and ban state and local taxes on Internet and telephone services.
Local governments are mobilizing in force to thwart the initiative, saying it would "blow an estimated $1.2 billion hole in a state budget that is already cut to the bone." The association representing Colorado counties plans to file a challenge regarding the validity of the 142,680 signatures that were collected to qualify the ballot measure.
Text of Proposition 101
Be it Enacted by the People of the State of Colorado:
Title 39, article 25 of the Colorado Revised Statutes
Reducing government charges
(1) Enforcement. This voter-approved revenue change shall be strictly enforced to reduce government revenue. It is self-executing, severable, and a matter of statewide concern that overrides conflicting statutes and local laws. Prevailing plaintiffs only shall have their legal fees and court costs repaid. The state shall audit yearly compliance with this reform to reduce unfair, complex charges on common basic needs.
(2) Vehicle. Starting January 1, 2011: (a) All annual specific ownership taxes shall decrease in four equal yearly steps to: New vehicles, $2; and other vehicles, $1. All state and local taxes shall cease on vehicle rentals and leases, and on $10,000, reached in four equal yearly steps, of sale prices per vehicle. Sale rebates are not taxable.
(b) All registration, license, and title charges combined shall total $10 yearly per vehicle. Except those charges, and tax, fine, toll, parking, seizure, inspection, and new plate charges, all state and local government charges on vehicles and vehicle uses shall cease. Except the last six specific charges, added charges shall be tax increases.
(3) Income. The 2011 income tax rate shall be 4.5%. Later rates shall decrease 0.1% yearly, until reaching 3.5%, in each of the first ten years that yearly income tax revenue net growth exceeds 6%.
(4) Telecommunication. Starting January 1, 2011, except 911 fees at 2009 rates, no charge by, or aiding programs of, the state or local governments shall apply to telephone, pager, cable, television, radio, Internet, computer, satellite, or other telecommunication service customer accounts. Added charges shall be tax increases.