Businesses to bear brunt of tourism funding
Post Independent Staff
with wire reports
GLENWOOD SPRINGS – A new tourism funding mechanism proposed in the state Legislature is receiving mixed reviews by retailers in this summer-dominated tourist town.
The proposal, House Bill 1017, cleared a House committee Wednesday. If the bill passes, the state would be able to use up to $25 million a year in sales tax revenue to finance tourism promotion. Supporters say this could translate into more than $2 billion in tourism revenue.
The issue lies in the source of the money. It would come out of the fees paid to businesses for collecting sales taxes, a plan some call selective taxation.
Retailers would give up one-third of the fee they now receive from the state for collecting and submitting tax revenue. They now keep 3.3 percent of the state sales taxes they collect, and the legislation calls for dropping that to 2 percent.
While the amount taken from each business is small – less than $400 for a business that does $1 million in gross sales in a year – some see the plan as a back-door method for state government to impose a tax without a vote of the people.
“At first blush, it’s a tax,” said Tom Engel, owner of Sioux Villa Curio and GWS Trading Post in Glenwood Springs. “It’s a selective tax because only certain people are paying it.”
The House Finance Committee voted 6-5 Wednesday to send the bill to the Appropriations Committee. The measure is sponsored by Rep. Al White, R-Winter Park.
Since voters in 1993 ended Colorado’s tourism tax, the state’s share of the national tourism market has slipped, resulting in losses of as much as $2.4 billion a year, White said.
To regain some of that market share, the state has to reach markets worldwide, and the $5 million the state is spending on promotion this year isn’t enough, White said.
Rep. Gregg Rippy, R-Glenwood Springs, said he supports the bill.
“I think it’s incumbent upon us to get as much economic development as we can,” he said.
The 3.3 percent fee for retailers began in the 1930s, before computers and calculators.
“It was much more difficult to calculate sales tax. Now it’s easy,” he said.
But in light of the huge budget deficit in Colorado, the competition for those fees is fierce. Rippy said another bill is targeting 1 percent of the fees to go directly into the state’s general fund.
Retailers also want to know how and where the new tourism funds will be spent?
Engel, who travels frequently on business, said he primarily sees Colorado promoted as a ski resort.
“They need to promote all the things that Colorado offers,” he said. “In addition to skiing, there’s whitewater rafting, fishing, camping and hunting. We should promote the year-round sports and things that are here.”
Rippy said any advertising campaign would promote activities in the state during all four seasons.
“Most people don’t know we have a wonderful summer in the mountains of Colorado,” he said. “It’s broad-based in how you market the state.”
Even though the bill most likely would positively impact Engel’s businesses in terms of more tourists, he opposes it because of its selectivity and because retailers already receive little enough compensation for collecting and filing sales tax.
“It’s really burdensome. If they were going to do it, I’d rather see them take a portion of the sales tax,” he said, suggesting adding 0.1 percent to the current state sales tax.
If the bill becomes law, Planted Earth Garden Center in Carbondale would have to pay its share toward the state’s tourism promotion program, even though its sales to tourists are virtually nonexistent.
But supporters of the bill say the money pitched in by companies that aren’t based on tourism will still benefit those companies.
Planted Earth general manager Shiri Hunter said she sees the bill as “a kind of a way to slip in a tax without calling it a tax.”
But she also saw positive aspects to the bill.
“It’s a creative solution. I don’t see it as an extremely negative thing,” she said. “Monetarily, it’s a blink. This company wouldn’t even notice it.”
Also, even though tourists don’t shop at Planted Earth, many people who cater to tourists run retail shops and attractions.
“It makes the economy healthier,” she said.
Contact Greg Masse: 945-8515, ext. 511
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