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NOREEN: Sales tax on groceries? It happens

By: BARRY NOREEN
February 12, 2013
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In much of Colorado sales tax is not imposed on groceries, but there are exceptions, especially in small towns.

Reader Kim Gardner of Woodland Park wrote, “There is a Papa Murphy’s store in town. When I purchase pizza at that store, I am charged sales tax at a rate of 3 percent which appears to be the Woodland Park tax rate only. If I purchase the same pizza in a Papa Murphy’s store in Colorado Springs, I am charged no tax at all. If I purchase food at a grocery store in Woodland Park, I am not charged tax at all unless the food is ready to consume. My question is whether the Woodland Park Papa Murphy’s store is properly charging city tax on their pizzas.”

The short answer is yes, the Woodland Park store is behaving properly, and the town does tax groceries.

Papa Murphy’s prepares pizzas but does not bake them. That means the pizza there is classified as raw food and as such, it is not subject to sales tax in most Colorado communities.

There are exceptions, and Woodland Park is one of them. The legislature eliminated the imposition of sales taxes on groceries at the state level in the 1970s, but allowed local governments to impose a grocery sales tax if they chose.

Thus, Woodland Park’s 3 percent sales tax includes groceries. Other towns that tax groceries tend to be small ones that don’t have big revenue streams, such as Eagle, Estes Park and Salida. The Colorado Department of Revenue posts the complete list at http:

/www.colorado.gov/cms/forms/dor-tax/dr1002.pdf.

“That’s a pretty good chunk of revenue,” said Woodland Park City Manager David Buttery.

In 2005, some Woodland Park merchants unhappy about Walmart coming to town gathered signatures for a measure to eliminate the sales tax on groceries, but the effort failed.

More than half of Colorado’s counties impose a grocery sales tax, but El Paso County does not. Neither do Colorado Springs, Fountain, Monument, Calhan, the Pikes Peak Rural Transportation Authority and the Baptist Road Rural Transportation Authority.

Cripple Creek, Green Mountain Falls and Manitou Springs impose grocery sales taxes.

Got a question? Contact Barry Noreen at 636-0363 or at barry.noreen@gazette.com. Follow him on Facebook and Twitter. Hear him on KRDO ? 105.5 FM and 1240 AM at 6:35 a.m. Fridays.

 

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