Colorful Commentary

You know what’s not nonessential? Facts.

Posted January 30, 2017 by Tim Hoover
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By Tim Hoover

CFI Communications Director

Pizza box

It’s not pizza. It’s an “alternative Hot Pocket.”

Sometimes in committee hearings at the Colorado Capitol, something gets said that goes unchecked, and the “alternative facts” snowball over the course of a few days into something so large, it is accepted as the truth.

So it was during a hearing of the House State Affairs Committee last Thursday, when the committee considered HB17-1009, a bill to restore a sales tax exemption for “nonessential” food-related items restaurants buy, such as paper napkins, plastic utensils, pizza boxes, condiments and so on. Lawmakers in 2010, faced with an epic budget shortfall, removed the sales tax exemption, which generates about $800,000 a year in revenue.

The House State Affairs committee rejected the bill on a party-line vote, with Democrats voting against it and Republicans for it. (Full disclosure: The Colorado Fiscal Institute testified against the bill, saying the state could ill afford to erode its revenue base when it is facing a shortfall for K-12 funding and middle class families struggle to afford to pay for higher education.)

As reported by The Denver Post, a witness testifying for the Colorado Restaurant Association told the committee that paying the tax costs some restaurants between $5,000 and $7,000 per year.  The obvious implication was that these are significant costs for restaurants that make it harder for them to keep their doors open.

If that wasn’t clear, a partisan blog picked up the line and repeated it, twisting the attribution away from the witness and saying, “According to the Post, this tax costs a typical restaurant $5,000 to $7,000 per year. That’s a significant number for a small business.”

But let’s slow this down a second and work it out.

A restaurant is spending between $5,000 and $7,000 per year paying these sales taxes? A “typical restaurant” is spending this much?

OK, taking the average of the two numbers, that’s $6,000 a year in taxes. But since the tax only brings in about $800,000 a year, that would mean Colorado has a total of 133 restaurants. Even the restaurant association says there are nearly 100 times that many establishments in the state.

Obviously, that’s not right. So, maybe it’s just a handful of restaurants spending that much?

Let’s just say, for example, that a restaurant was paying $5,800 a year in sales taxes, on the low end of the estimate. Let’s assume they’re paying those taxes on styrofoam containers, the kind of “doggy bag” boxes you take leftovers home in.

An online check of prices shows that the restaurant would be spending $200,000 a year on these containers, purchasing 2.7 million of them.

Now, that’s a lot of Cheddar Bay Biscuits.

Maybe there is a very large restaurant, or a chain of restaurants, that’s spending this kind of money on such items, but a “typical” restaurant? Probably not.

The Oxford English Dictionary now defines “post-truth” as “relating to or denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief.”

But we find “alternative facts” just give us indigestion.

 

2 Responses to “You know what’s not nonessential? Facts.”

  1. Rita Fitzpatrick says:

    Thanks for breaking this down. It makes the claims about this tax hurting small businesses sound hollow indeed. The truth is that the businesses will pass this along to consumers. I don’t think this will put them out of business.

  2. Tom Yondorf says:

    What do folks think about tax credits as A) a means to build / reward/attract certain interest groups and or businesses and B) a looming dangerous drain on a state budget already handicapped by Tabor?

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