Colorado may regain soft drinks tax exemption

A Colorado tax exemption on soda was removed after the state Senate passed a bill in February last year to eliminate tax breaks for soda and candy sold in the state, resulting in a 2.9 percent increase in sales tax on the products from March 2010.

Proponents of removing the tax break said it could help boost the state’s economy by millions, but its opponents said that it could lead to job losses.

Rep. David Balmer (R-Centennial) introduced the bill, saying that increasing the tax on soda hit poorer people hardest and cost jobs. On Wednesday, the House Finance Committee passed the bill on a party-line, 7-5 vote, and it now goes to the House Appropriations Committee. The additional tax on candy will remain, as Balmer said he did not think he could get enough support for a repeal of both taxes.

Repealing the sales tax exemption is estimated to have a potential cost for the Coloradan economy of $12.3m a year.

Extra taxes on products like candy and soda have been proposed in many states across the country, as a potential source of income as states struggle to plug budget deficits, as well as a possible way to fight obesity.

A soda tax was most recently proposed in Hawaii, where state Senators voted against a plan to add up to 25 cents to the cost of a bottle of soda earlier this month.

However, Colorado is relatively unusual in its tax exemption for soda; 33 states impose a sales tax on soft drinks.