Aurora city lawmakers consider ending exemption on cigarette tax

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AURORA | A sales and use tax exemption on cigarettes sold in Aurora may soon be over, allowing the city to collect more than $2 million each year.

Aurora City Council members will take up the topic at a study session on Monday. A majority of council members supported considering eliminating the exemption at a workshop in April. 

Cigarettes were exempted from the city tax in Aurora in 1963, as the state applied excise tax to the product and provided revenue sharing from the excise tax. If cities applied their own taxes they could no longer take part in that revenue sharing. But a passed bill in the state Legislature this year removed that rule.

In Colorado, 27% percent of what’s collected on the 20-cents-per-pack state tax is shared back to local governments. With the passage of the state bill, four cities are now allowed to take part in that revenue sharing. City staff says the result is a lesser amount that Aurora and others get.

Aurora estimates it’ll get $633,713 from the revenue sharing this year. But it could make significantly more if it applies its own taxes to cigarettes.

Estimates by the city put revenue at approximately $2.3 million.

“The net revenue increase will be less than 1% of the city’s sales and use tax collections of $236.9 million, and less than 0.5% of total General Fund tax revenues,” according to the city.

This year legislators nearly approved a bill that allows voters to decide whether cigarettes and other tobacco products, including nicotine vaping devices, should be higher. That failed in the state Senate.

The proposal would have asked voters if Colorado’s sales tax on cigarettes should increase from 84 cents to $2.59 a pack. Voters would have decided whether  nicotine vaping devices would be taxed at 62% of their wholesale price. So, too, would other tobacco products. 

State officials said the tax hikes could generate more than $300 million a year for childhood education, tobacco prevention programs and other health services.

During the Monday study session, city council will also consider an ethics ordinance. Controversial oil and gas agreements have been moved to July 15.

A city bill codifying parts of the Colorado Open Records Act into city code is also up for consideration.

— The Associated Press contributed to this report.