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Second proposed Denver sales tax increase could raise rate to 9.65%

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(The Center Square) – The sales tax in Denver could reach close to 10% if another proposed increase makes it to the ballot and is approved.

Denver Democrat Mayor Mike Johnston sent a proposal for a .5% sales tax to the city council to raise approximately $100 million for affordable housing in the city. Purchases of food, fuel, medical supplies and personal hygiene products wouldn’t be taxed.

In June, the city council voted 12-1 to put a three-fourths of a cent sales tax on the November general election ballot to annually raise approximately $70 million for Denver Health, the city’s hospital and health care provider.

“I told the mayor yesterday that I am voting no on this, for the same reasons I voted no on the Denver Health sales tax referral to voters,” Councilman Kevin Flynn, who cast the only dissenting vote on the Denver Health initiative, wrote in an email to The Center Square. “To be clear, I am not opposed to finding sustainable ways of incentivizing more housing construction, which we need. I’m trying to establish a ceiling for special sales taxes, of which we already have eight.”

If voters approve both initiatives, Denver’s rate would be 9.65%. The current rate is 8.81% with the city and county sales tax at 4.81%, the regional transportation sales tax at 1%, the scientific and cultural facilities sales tax at .1% and the state sales tax of 2.9%.

Colorado’s state sales tax is the lowest in the nation except for those states without a sales tax, according to a report Tuesday by the Tax Foundation. The average local tax rate in Colorado is 4.907% and the highest rate is 8.4%, according to the report. It found the combined rate is 7.807%, ranking the state the 16th-lowest rate in the nation.

Boulder’s total sales tax rate is currently 9.045%, according to the state’s online sales tax database, and Vail’s rate is 9.4%. Winter Park has 7% local sales tax rate and a total of 11.2%.

If approved by the city council for the ballot and approved by voters, the measure would establish the Affordable Denver fund. The money would preserve existing income-restricted homes and rental units and fund new construction of multifamily rental units, according to information from Johnston’s office. Financial assistance would be provided for “accessory dwelling units for low/middle-income households” and investment for mixed-income city developments. Rental assistance for extremely low-income households would be provided along with project-based vouchers with the funding.

Johnston gathered dozens of supporters to announce the event on Monday and emphasized the need for affordable housing for teachers, nurses, first responders and seniors in the city. The goal is to add 44,000 affordable housing units during the next 10 years.

“We want to be the city that is both a great economic engine and is still affordable for everybody to live,” Johnston said in a video posted to X, the platform formerly known as Twitter.

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