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A Look At TABOR And The Recreational Marijuana Sales Tax Holiday

Marijuana Plant

The state of Colorado is having a pot holiday, well sort of, on Wednesday, Sept. 16. It's lifting the 10 percent sales tax people pay on recreational marijuana and the 15 percent excise tax paid by the industry.

This is a result of the voter-approved Tax Payers Bill of Rights, known as TABOR. To help explain how this law works and is applied, KVNF's Laura Palmisano spoke to Richard Collins, a law professor at the University of Colorado, Boulder. 

Interview Highlights

On How TABOR Works

"[TABOR] has three main functions. The one that most people know about is that any tax increase requires a popular vote of approval before it can be affective. Another rule is that any debt increase by a government requires a popular vote.  But the third requirement, the one that we're talking about today,  is a requirement that limits the amount of revenue that the government can collect unless there is a popular vote to allow collection of more.  And, if excess revenue is collected then there has to be a refund or tax holiday or some other method of giving the money back."

On How TABOR Triggers A Sales Tax Holiday 

"When the state government exceeds the [TABOR] limit it can give the money back in any possible way, but some branch of the government with authority to do this chose as the method of complying with TABOR to have a tax holiday for marijuana sales taxes." 

On The Big Issue With TABOR  

"The really problem is the revenue cap in TABOR forces government to actually shrink. The reason is the economy grows faster than the TABOR formula. The TABOR formula at first glance looks like a steady state formula, but it's not. If the economy is growing the TABOR formula is slower than the economy and therefore it causes government to shrink, which was I'm sure was the idea. The proponents of TABOR wanted government to shrink so that's why they did that." 

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