AURORA | The City of Aurora will not start collecting a controversial sales tax from coin-operated laundromats and self-service car washes after all, city lawmakers agreed at a study session Monday night.
“This is really taxing the poor,” said Aurora City Councilwoman Sally Mounier, one of five council members who voted against enforcing a long-overlooked portion of Aurora’s tax code that allows the city to collect a 3.75-percent sales tax on coin-operated businesses.
According to city staff, implementing the tax would have provided city coffers with $300,000 in new revenue and would have been applied to an estimated 22 laundromats, 16 self-service car washes, 24 in-bay car washes and a handful of coin-operated massage chairs across Aurora.
“For a city the size of Aurora, the $300,000 we’re going to potentially gain, we’ve seen ill-will and the backlash on this that’s worth more than $300,000,” said Aurora Councilman Bob Roth, who opposes the tax. Council members Bob Broom and Renie Peterson voted to enforce the tax, while Councilwoman Molly Markert abstained from voting on it. Council members Marsha Berzins and Bob LeGare were absent from the vote.
Coin-operated business owners have adamantly opposed the tax, which was initially recommended by the city’s Business Advisory Board and the Citizens’ Advisory Budget Committee to be enforced starting in 2017.
The business owners contend the city would be implementing double taxation, as they would have to pay a sales tax upon the purchase of their facility’s equipment, as well as on each sale for the service. In the city’s tax code, the tax falls under rentals of tangible, personal property, which makes it subject to sales tax.
“We collect more than two-thirds of our budget from sales tax. We can’t pick and choose who we’re going to tax,” Broom said in defense of the measure.
A flurry of recent case law involving successful arguments in favor of similar coin-operated tax requirements in Glendale, Commerce City, Westminster and other metro municipalities, led the city’s tax and licensing division to recommend beginning collecting the tax.
“For a city the size of Aurora, the $300,000 we’re going to potentially gain, we’ve seen ill-will and the backlash on this that’s worth more than $300,000,” said Aurora Councilman Bob Roth, who opposes the tax.
In 1994, Aurora even served as ground zero for the issue when a jukebox company sued the city over the sales tax. The case was decided by the state supreme court which ruled coin-operated vendors enjoyed a “major advantage” from not needing to hire operators, and that they shouldn’t receive special treatment over other businesses.
Trevor Vaughn, manager of the city’s tax and licensing division, said the process would work similarly to how the city taxes vending machines and arcade games, where businesses pay for the tax by increasing the price of the service.
Vaughn said the city looks at self-service businesses as renting equipment rather than providing a service because an individual is paying to use a machine for a specified amount of time.
“A good rule of thumb, if you’re paying someone to do something for you, that’s a service,” he said. “When you go to car wash, there’s not necessarily someone there working the car wash.”
Aurora City Attorney Mike Hyman said since the taxing of the businesses was already part of the tax code, legislation would now have to be crafted to exempt the businesses from the tax. He said that issue would need to go back to the city’s Management and Finance Committee.
The potential change would not affect state sales tax, as Colorado exempts the rental of short-term services from paying sales tax. Vaughn said the only way these businesses now pay the state is through taxes on vended items on-site such as detergent and other cleaning supplies.
— Staff Writer Quincy Snowdon contributed to this story.