As taxes go, the sales tax is among the worst. It is regressive because it doesn’t cover items that rich folks buy, like stocks, bonds, water rights and legislation.
Even when it does affect their purchases, they find ways to evade it. A billionaire railroad owner gets the legislature to grant an exemption for locomotive parts, but a self-employed Coloradan pays sales tax on every ream of paper. And if anyone proposes to rectify such inequities, it’s a “job-killing tax increase.”
The sales tax also encourages local governments to shaft their citizens. Suppose Big Box Retail wants to build a new store in the area. The municipalities compete for Big Box sales- tax revenue by offering hidden subsidies like utility abatements. Residents of the “winning” city thereby pay higher utility bills. Some residents are retailers who are thus forced to subsidize their competition.
That said, we have a sales tax in Colorado, and it’s been the subject of discussion lately as it pertains to out-of-state purchases.
Actually, we have a sales and use tax. I learned about the use tax when my dad gave me an old utility trailer. He signed over the title and I went to the county clerk to register the trailer.
“You’ll have to pay the sales tax on it before you can get a license plate,” she said. “What sales tax?” I asked. “It was a gift, not a sale.”
“Actually, it’s a use tax,” she explained. “The law says you have to pay the sales-tax rate on the fair market value of the trailer.” After some dickering, we agreed the trailer was worth $25, and I grudgingly paid the 75 cents.
The sales tax causes more inequity when you buy something from an out-of-state vendor. If that vendor has no physical presence in Colorado, the vendor is not required to collect sales tax. This is unfair to the local merchants who must collect the tax. Further, when the high-school band needs new uniforms, do you think Amazon will contribute?
However, state law requires the purchaser to pay the tax on these transactions. For example, I spent about $600 last year on computer parts from out-of-state vendors. (I try to buy locally, but it isn’t always practical.)
So if I wanted to be a law-abiding citizen, how would I pay the tax?
You can download form DR 0252 from the Colorado Department of Revenue’s website, fill it out and file it with a check. The department collects only the state’s 2.9 percent tax and additional tax for a few special districts. Town and county sales taxes aren’t covered. I checked with Salida and Chaffee County (both collect sales taxes). They don’t have any similar procedure, since neither collects a use tax on items bought outside their boundaries.
According to Mark Couch at the DOR, 6,554 DR 0252 forms have been filed since last September. Last year, the process produced $68.2 million in sorely needed state revenue; that was 3.5 percent of the total sales-tax revenue of $1.9 billion.
If you fail to file, it’s unlikely that the revenuers will be after you with bills and liens, since the department doesn’t have the staff to track minor purchases. But since I made my sales- tax griping public, I’ll need to pay the $18 or so of use tax. I’d put it in as a research expense, but getting an expense reimbursement from The Post in these straitened times is an even greater challenge than reaching a human at the short-staffed Colorado DOR.
Ed Quillen (ekquillen@gmail.com) of Salida is a regular contributor to The Denver Post.
