Date: 02/02/2006

Final
BILL SUMMARY for HB06-1117

HOUSE COMMITTEE ON FINANCE

Votes: View--> Action Taken:
Moved to postpone House Bill 06-1117 indefinitely.
Refer House Bill 06-1117 to the Committee on Appro		PASS
FAIL


09:36 AM -- House Bill 06-1117

Representation Cadman, prime sponsor, explained that for the purposes of calculating the amount of sales tax owed, House Bill 06-1117 changes the calculation of the purchase price of tangible personal property for items with manufacturer rebates or coupons. For items with manufacturer rebates (or coupons), sales taxes would be calculated after adjusting the item's price for the savings resulting from the rebate or coupon. This specified reduction in the purchase price would not be applied to rebates or coupons that are redeemed by mail.

Representative Cadman commented on the fiscal impact of the bill and said that for FY 2005-06, there may be a potential decrease in General Fund revenue but for FY 2006-07, the fiscal note estimates the cost of the bill at $16.6 million. The committee discussed the rebate process for manufactured goods and the effect on the total sales taxes collected on the goods. The discussion continued on the process of calculating sales taxes. The committee discussed the policy issues behind funding the bill. Representative Cadman commented that the bill corrects the problem that addresses the "over-collecting" issue of state sales taxes. Representative Cadman commented that the bill would require that consumers only pay a sales tax on a product after rebates or coupons offset the product's sale price. The committee discussed the timing of the policy in terms of revenues collected by the state under Referendum C. Representative Vigil called a spokesperson from the Department of Revenue to clarify the sales tax collection process for products that offer consumers manufacture's rebates.

The following person testified:

09:53 AM -- Mr. Bruce Nelson, Colorado Department of Revenue, responded to committee questions and clarified the department's policies on the effect of coupons and rebates when calculating state sales taxes.

The committee discussed the policy issue: should consumers be charged a sales tax on the price for a good before any rebates, or the price of a good after a rebate is calculated into the sales price. The committee discussed the rule-making process that the department uses to determine the sales tax calculation process for products that have a price reduction through a rebate or coupon. After a brief committee discussion, Representative Vigil, Chairman, placed the bill on the table for action.
BILL:HB06-1117
TIME: 10:05:32 AM
MOVED:Cloer
MOTION:Refer House Bill 06-1117 to the Committee on Appropriations. The motion failed on a 8-5-0.
SECONDED:Harvey
VOTE
Benefield
No
Cloer
Yes
Crane
Yes
Frangas
No
Garcia
No
Harvey
Yes
Jahn
No
Kerr
Yes
Marshall
No
Massey
Yes
McCluskey
No
Judd
No
Vigil
No
Not Final YES: 5 NO: 8 EXC: 0 ABS: 0 FINAL ACTION: FAIL
BILL:HB06-1117
TIME: 10:17:03 AM
MOVED:Garcia
MOTION:Moved to postpone House Bill 06-1117 indefinitely. The motion passed on a 7-6 vote.
SECONDED:Judd
VOTE
Benefield
Yes
Cloer
No
Crane
No
Frangas
Yes
Garcia
Yes
Harvey
No
Jahn
Yes
Kerr
No
Marshall
Yes
Massey
No
McCluskey
No
Judd
Yes
Vigil
Yes
Final YES: 7 NO: 6 EXC: 0 ABS: 0 FINAL ACTION: PASS