The City of Denver, Colorado, like many major cities around the United States, is attempting to reduce waste by encouraging people to bring their own bags when they go shopping.
As such, the Mile High City implemented its "Bring Your Own Bag Program" effective July 1, 2021. Official details about the program read:
- Retail stores located in Denver are required to charge 10 cents per carryout bag.
- Shoppers can avoid the bag fee by bringing their own bags.
- The bag fee does not apply to some bags such as those used to package bulk items, produce, meat, or fish.
- Participants in state and federal Food Assistance Programs will not be charged for carryout bags.
- Charges for bags must be displayed separately on customer receipts.
- Portions of the bag fee are kept by the store to cover the cost of implementing the program and by the city to address the impacts of disposable bags and single-use products in our community.
Now, Denver is charging sales tax on the 10-cent bag fee, as well as on the new 27-cent delivery fee that went into effect in July 2022. The Denver Gazette shared that the delivery fee was intended to be exempt from local sales tax, but something has gone awry and residents are now paying the price.
Axios noted that "the taxes collected — a half-cent from the bag fee and 1 cent from deliveries — aren't much, but Denver's Department of Finance spokesperson Kiki Turner said it was unintentional."
Per the Gazette, "the [delivery] fee has caused confusion not only among retailers implementing it and their accountants, but also with local governments."
Officials in Denver suburb, Aurora, specifically spoke out, with the newspaper reporting:
“Aurora, as a home-rule city in Colorado, has similar but different definitions that apply to the collection of sales taxes,” said spokesman Ryan Luby via email. “Part of Senate Bill 21-260, which ushered in the new fee, included a change to the state’s definition of purchase price to exclude the Retail Delivery Fee and essentially lowered the price used to calculate the sales tax. The City of Aurora has not made a similar change to its definition of purchase price.”
Adding the $0.27 fee to a $10 taxable good delivered in Aurora, for example, means a total purchase price of $10.27, which is subject to the city’s 3.75% tax rate. That adds 1 cent to the total amount customers would have to pay.
At this time, it is unclear if the City of Denver will reassess the tax -- and its impact on local consumers -- in the near future.
Has Denver's new delivery tax affected you?
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