Amendment 72 Could Increase Smuggling

This November, Colorado voters will decide whether to approve a $315 million per year tax increase. While the tax increase proponents will list a series of potential benefits, they will gloss over the proposal’s many pitfalls. This constitutional amendment locks hundreds of millions of dollars in spending in the constitution and also will likely increase crime in the state. This is a lose-lose for our community.

Amendment 72 is a constitutional amendment that locks $315 million in new spending into the Colorado Constitution without any way to change it without another statewide vote, even in the case of waste, fraud, abuse or budget emergency.

Even worse, the way this measure is written offers little accountability and no oversight to how the funds are distributed. Fifty-one percent of the new tax dollars fund grant awards where guidelines aren’t even written yet. Coloradans deserve to know exactly how the money will be spent and that it will not be wasted.

This lack of accountability creates conflict of interest concerns as it dedicates $315 million to state agencies to distribute in grants to pet projects. Additionally, the State Auditor recently cited an agency responsible for awarding grants from the new tax dollars for needing stronger conflict of interest policies. In short, this measure gives a blank check to special interests while allocating less than 20% to smoking prevention.

But it gets worse. This tax increase could encourage cigarette smuggling in Colorado. Right now, the state has a relatively low smuggling rate of about 12 percent of cigarettes consumed. Most of that smuggling is attributed to personal use smuggling – for example, buying cigarettes from Nebraska or Wyoming because each state has lower tobacco excise taxes . One study showed that if this tax increase passes, the smuggling rate would triple to 36 percent of cigarettes consumed in the state – that would give Colorado the fifth-highest rate of smuggling in the nation. Half of that smuggling would come from smuggling for personal use, but the other half would result from commercial smuggling.

Commercial smuggling typically involves organized crime and facilitates other crimes.

This measure could encourage smuggling from the states that surround Colorado because, if passed, every single surrounding state would have a lower tobacco excise tax than Colorado. Colorado is just one state away from Missouri, which has the country’s lowest tobacco taxes in the United States. All of these factors would encourage black market sales.

While the reward from tobacco smuggling can be enormous, the risk is low. Cigarette smuggling could very well divert $3 to $7 billion in tax revenue from state and local governments each year. That translates to less money for health and education programs, government services and, yes, even the law enforcement necessary to combat the increased crime.

Colorado families are facing real issues here in Colorado, including education funding shortfalls, crumbling roads and bridges, and rising cost of living. This amendment would not fix any of these problems. In fact, it would create additional problems without dedicating any funding to fixing the new issues.

Voters should reject Amendment 72 because blank check spending does not belong in our state’s constitution. It is a poorly-drafted measure that would create more problems that it would solve.