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  • Dylan Anderson

Steamboat Springs will keep collecting sales taxes on diapers, period products

A Colorado law went into effect in January exempting these products from state sales taxes, but most municipalities haven't adopted the same exemption.

Steamboat Springs will keep its 4.5% sales tax on personal hygiene products despite a state of Colorado law exempting these items from any state sales tax going into effect in January.

The state law removed sales taxes from incontinence products, diapers and period products, in an effort to ensure these items are more affordable to everyone, though it allows local municipalities to make their own decisions on how to employ sales taxes.

As it is, Steamboat already taxes many items that sales taxes levied by Routt County and the state do not, including groceries, bottled water, utilities and corrective eyewear. Across the state, just 4% of jurisdictions have taken steps to officially align with the new state law, according to a review from city staff.

While council members Dakotah McGinlay and Gail Garey pushed for Steamboat to remove the regressive tax on these products, the proposed ordinance failed on a 2-4 vote, with council members Michael Buccino, Joella West, Ed Briones and President Robin Crossan all opposed.

The potential loss of revenue for city coffers was a concern, as taxes from these products equate to roughly $100,000 to $150,000 each year. (All sales taxes in 2022 totaled more than $40 million, making taxes from these products less than 0.4% of annual sales tax revenue).

But Crossan also pointed to making this type of change in the sales tax code as a potential bargaining chip to use with voters to eventually support a property tax.

“We almost got to the point a couple years ago of sending a property tax to voters and one of the carrots was how do we balance for locals having a property tax and taking away something from the sales tax,” Crossan said. “If we keep taking things out of the sales tax, we are going to get to the point where if we ever choose to go for a property tax, we are not going to have anything left to negotiation with our community for them to pass a property tax.”

Crossan also made a slippery slope argument for why council shouldn’t exempt these products, asking McGinlay what she would do if the next request was to exempt toothpaste from sales taxes.

“This is a snowball that will not stop, and I don’t think you are strong enough to say no,” Crossan said, speaking to McGinlay.

“It’s supported by the state, it’s not just a community member that doesn’t want to pay for toothpaste,” McGinlay responded.

Colorado and Routt County exempt a number of products from sales taxes that are still subject to Steamboat’s local 4.5% sales tax. Across the country, just 13 states employ a sales tax on groceries. Sales taxes are considered a regressive tax, as they have more impact on the finances of those with lower incomes. This is because these folks end up spending larger shares of their incomes on food, utilities and hygiene products.

“These hygiene products are essential,” said Judy McGinnis in public comment. “Steamboat is an example of income and wealth inequality. … To have a regressive tax on essentials that primarily affects locals is inconsistent with council’s recognition that affordability for young people and longtime residents is a priority.”

For council member West, the potential loss of revenue however small was her rationale for voting against the proposed ordinance. "

“At what point are we going to nickel and dime ourselves as a council into budget issues,” West said, also pointing the proposed council member raises that she does not support. “I’m very hesitant to keep going down this path.”

In her comments, Crossan challenged those that supported this measure to work to try to “put money back in the pot,” eluding to a property tax.

“Until we come together as a community to figure that whole pot out, I going to say no,” Crossan said.

Top Photo Caption: Steamboat Springs City Council meets in Centennial Hall. (Dylan Anderson/The Yampa Valley Bugle)


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