Lawsuit threatening to do away with food-tax refund
The city of Aspen is being sued by several out-of-towners over the city’s food-tax-rebate program, which the complainants say is unconstitutional.The three plaintiffs are Steven A. Martino of Mobile, Ala.; Jon Ronay of Basalt; and Martha L. Sommers Ronay of Basalt.Represented by attorneys in Denver and Mobile, they filed a “class action complaint” on April 1, in U.S. District Court in Denver, and demanded a jury trial. It will be up to a judge whether the case will proceed as a class action or not.The lawsuit maintains that the city is unfairly taxing nonresidents at a rate higher than the effective rate paid by residents, because residents can receive an annual refund that is denied to nonresidents.City officials learned of the suit on Tuesday, when they were served with papers. Named as defendants in the suit are Finance Director Tabatha Miller, finance department official Larry Thoreson and the city of Aspen as a whole.The food-tax-rebate program, which began in 1970 as an enticement to get voters to pass a sales tax, has for more than 20 years offered Aspen residents a bit of relief from the city’s food tax. To qualify, a resident must live in Aspen for an entire year and apply for a rebate by April 15 of the following year.The sales tax passed by the voters that year, known as the “sixth penny,” was to raise money for the city’s parks and open space fund. In 1972, voters were asked to pass a “seventh penny” tax for a newly created “transportation/mall fund,” and the rebate was increased to win voter approval of the new tax.According to a history of the tax, compiled by the finance department, it originally offered a rebate of $7 per person per year, which was raised to $21 in 1972 and $39 in 1981. This year, eligible residents will receive $50 apiece from the city.The rationale behind the program, according to observers, was recognition of the fact that many municipalities do not collect sales taxes on food items, and to offer a rebate to city residents already strapped by the high cost of living.The city also offers a separate rebate to local senior citizens.The lawsuit has been filed on behalf of “all nonresident persons of the City of Aspen subjected to the discriminatory sales tax of the City of Aspen,” according to the complaint delivered to city officials this week.The suit admits that the number of the “members of the Class” cannot be known, “but it is estimated that there are thousands of members of the Class.”The Ronays declined to comment on the suit.Claiming the “members of the Class” have been “unconstitutionally denied access to a refund,” the suit argues that the relevant city codes “arbitrarily and capriciously discriminate” against nonresidents who buy goods in Aspen and pay the sales taxes. The suit also cites the “equal protection clause of the Constitution of the United States” and other portions of the Constitution as forbidding such taxes.Attorney Ted Trauernicht of Denver, representing the Ronays, said the purpose of the suit is to erase “an unjust enrichment for Aspen residents,” although he conceded that $50 per person per year is “not a lot of money.”But, he said, “It creates a constitutional issue of unfair taxation.”Trauernicht indicated that the suit originated as a complaint from the Mobile, Ala., resident. He said the Sharbrough law firm from Mobile contacted his office, Futro & Trauernicht of Denver, about filing the lawsuit, and that his office had been talking with the Ronays about the fairness of the tax.Trauernicht declined to discuss the possibilities of a settlement, or what the amount of such a settlement might be. He noted that it will be up to the court to decide whether “compensatory damages” should be awarded in this case, and how they should be distributed if they are awarded.Aspen City Attorney John Worcester said Wednesday he had not had time to completely familiarize himself with the lawsuit or research the legalities involved.But, he said, “They raise some interesting questions.” The city has 20 days to respond to the lawsuit in Denver District Court, or lose the case by default.
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