Food tax should be adjusted for inflation
February 9, 2018
I understand the City Council will hold a Public Hearing regarding an adjustment of the voter approved food tax refund on Feb. 12.
The food tax refund is not a benevolent act by the City Council, but rather a twice voter authorized use of sales tax revenues.
In a Special Election held Sept. 1, 1970, the voters of the city of Aspen passed a 1 percent sales tax "providing that said revenues shall be expended by the city council for the payment of food tax refunds." A copy of the ballot language is attached for your reference. On Nov. 7, 1972, another special election was held to increase the sales tax from 1 percent to 2 percent providing once again that additional funds be used for payment of food tax refunds. Many Colorado municipalities exempt food sales from local sales tax. The ballot provision for food tax refunds was a mechanism to entice the community to support 1970 and 1972 sales tax on retail sales including food sales. The city code has provided for the use of sales tax revenue for food tax refunds since 1970. Full-time resident food tax refunds account for a fraction of food tax collections.
Despite the voters' specific authorization of the food tax refund, the City Council has neglected to adjust the amount of the food tax refund to keep up with inflation of groceries and therefor food taxes paid. The proposed increase in the refund from $50 established in 1998 to $55 per full time resident in 2018 would a violation of the intent of the voter authorized food tax refund. The 1972 refund of $21 per person equated to 2 percent in sales taxes on $1,050 in annual groceries. City staff has suggested 2018 groceries are about $200 per person per month, $2,400 per year or just over double 1972's basis for the food tax refund. 46 years of inflation adjustment suggests full time locals spend about $6,400 per year on groceries, 2.5 times staff's representation. $6,400 is less than the per person annual grocery bill in my household.
It well past time for the city of Aspen to be true to the intent of the 1970 and 1972 voter approvals and adjust the food tax refund to track with increases in food costs. To be true to the voter authorization of the 1970 and 1972 sales tax, the food tax refund should be a reasonable estimate of full time resident food taxes paid. Inflation adjustment of either 1972's $21 or 1998's $50 per person food tax refund indicates $75 or $125 per person is a reasonable estimate. Going forward, the per person food tax refund should be inflation adjusted annually.
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