TITLE: CONCERNING THE REINSTATEMENT OF THE SALES AND USE TAX EXEMPTION FOR COINS AND PRECIOUS METAL BULLION.

Fiscal Impact Summary	FY 1999/2000	FY 2000/2001
State Revenues General Fund	-$93,613	-$194,340
State Expenditures General Fund
FTE Position Change	0.0 FTE	0.0 FTE
Other State Impact: TABOR Impact
Effective Date: The bill is effective upon signature of the Governor. The exemption is effective for purchases on or after January 1, 2000.
Appropriation Summary for FY 1999-2000: None
Local Government Impact: The bill reduces the revenues of the state and statutory cities, counties, and certain special districts where the local sales tax is collected by the state.

Effective January 1, 2000, this bill, as amended in the Senate Finance Committee, permanently reinstates the state sales and use tax exemption on the sales of coins and precious metal bullion. This would include the sale of coins and precious metal bullion by or through any person who is registered pursuant to the federal “Commodity Exchange Act”, or who is not required to be registered by the federal act. The previous sales tax exemption on coins and precious metal bullion expired on April 17, 1995. The bill reduces the revenues of the state and statutory cities, counties, and certain special districts where the local sales tax is collected by the state. Therefore, the bill is assessed as having state and local fiscal impact. The bill does not affect state or local expenditures.

This bill permanently reinstates the state sales and use tax exemption on the sales of coins and precious metal bullion. Based on information provided to the Department of Revenue by the Colorado Rare Coin/Precious Metals Dealers Survey and a comprehensive audit of the industry performed by the Department of Revenue Field Audit Section, it is estimated that the state sales tax revenue reduction as a result of the exemption will be $93,613 for the six-month period from January 1, 2000, through June 30, 2000 (FY 1999-00), and $194,340 in FY 2000-01.

Under current law, SB97-1 requires the diversion of 10 percent of sales tax revenues to the Highway User Tax Fund for use on highway projects. This bill will reduce state sales tax revenues beginning in FY 1999-00, and will therefore, reduce the amount of state funds available for the SB 97-1 diversion. Additionally, the reduced state revenues will mean a reduction of the amount of future state funds required to be refunded to taxpayers under the terms of TABOR.

Except for specific exceptions, sales and use tax exemptions authorized at the state level also apply to statutory cities, counties, and special districts since their sales and use tax is collected by the state. Home rule cities collect their own sales and use tax, and may determine their own tax base. It is presumed that the majority of gold dealers are located in home rule cities or in unincorporated areas that would be unaffected by the bill. No estimate has been made regarding the potential amount of sales and use tax revenue losses to local governments.

The fiscal note implies that no new spending authority or appropriations are required to implement the provisions of the bill.