Proposition II - Retain Nicotine Tax Revenue in Excess of Blue Book Estimate

In 2020 voters approved Prop EE to increase taxes on nicotine and tobacco products by taxing wholesalers and distributers. The Blue Book’s estimate of tax revenue turned out to be lower than the actual taxes collected. In such a case, TABOR requires that, “except by later voter approval, … the tax increase is thereafter reduced up to 100% in proportion to the combined dollar excess, and the combined excess revenue refunded in the next fiscal year.”

Prop II is asking for the “later voter approval” to maintain the tax rate approved in Prop EE and to allow the state to retain the excess revenue already collected and all excess revenue going forward.

A main aim of Prop EE funding was to “enhance the voluntary Colorado Preschool Program and make it widely available for free.” Passage of Prop II would further that objective with continued funding.

Recommendation: YES/FOR

We’ve been down this road before. In 2015 Prop BB asked voters to “de-Bruce” -- in this case, retain Prop AA revenue in excess of the Blue Book estimate for marijuana taxes. Colorado is the only state with TABOR.

If this measure fails, the tobacco wholesalers and distributors who would receive the tax refund come out way ahead because they’ve already passed on the taxes to their customers in higher prices. What guarantee do we have that the tobacco and nicotine companies will proportionally reduce their prices in the future if Prop II fails? If anyone should be getting a tax refund, perhaps it should be the tobacco and nicotine customers who couldn’t pass on the higher taxes to anyone else.

Passage of this measure would be a financial win for Gov Polis’ efforts to provide free preschool in Colorado.

Website for the Yes side
https://www.preschoolforallcoloradans.com/

Website for the No side
No known website – Info on an opponents’ website appreciated.


Approved Ballot Language
Proposition II (STATUTORY)

Without raising taxes, may the state retain and spend revenues from taxes on cigarettes, tobacco, and other nicotine products and maintain tax rates on cigarettes, tobacco, and other nicotine products and use these revenues to invest twenty-three million six hundred fifty thousand dollars to enhance the voluntary Colorado preschool program and make it widely available for free instead of reducing these tax rates and refunding revenues to cigarette wholesalers, tobacco product distributors, nicotine products distributors, and other taxpayers, for exceeding an estimate included in the ballot information booklet for proposition EE?

YES/FOR ___
NO/AGAINST ___

HB23-1290 to refer Proposition II to the voters
https://leg.colorado.gov/sites/default/files/2023a_1290_signed.pdf