Thanks to TABOR, Colorado’s taxpayer bill-of-rights law, tax revenue that comes in over a certain threshold is mandated to be returned to the taxpayers. Colorado is expecting excess revenue this year, as Governor John Hickenlooper has said, and a rebate will be in order.
Why? Well, partly because taxes raised from the sale of marijuana have fueled the government’s coffers above and beyond what had been expected:
Gov. John Hickenlooper’s proposed $26.8 billion Colorado budget, unveiled Monday afternoon, includes two rebates for taxpayers.
A $30.5 million rebate for new marijuana taxes is coming. Total state marijuana revenue was different than what was projected in the election blue book for 2013’s Proposition AA. Because the estimate was off, under TABOR, the state must refund the money being collected or ask voters again to keep it.
I had previously written about the dangers of expecting larger-than-projected tax returns, especially for something that is in part a “sin tax”, but it does look like Colorado has outperformed its expectations here. Caution is still needed, however: this isn’t a reason to overproject tax revenue for the next year going forward when it comes to marijuana. Sin taxes are unpredictable, and sin taxes based on a newly-legal activity likely to be more so.