Editor’s Note: This story has been update to reflect the positions of the Metro Denver Chamber of Commerce, which decided to support one sales tax rate increase proposal, and the Downtown Denver Partnership, which is now backing both tax hikes, in the time between initial interviews and this story’s publication.

Denver voters will decide the fate of at least one — likely two — proposals to increase sales taxes, which if approved would generate close to $200 million annually and catapult the city atop jurisdictions with the highest sales taxes in Colorado.

One proposal, which would raise sales taxes by 0.34 points and is meant to fund Denver Health, is already headed for the ballot box. Additionally, Mayor Mike Johnston is pushing for another 0.5-point increase to generate $100 million for affordable housing.

While the tax hike aimed at generating $70 million for Denver Health faced some pushback from councilmembers, one voice was notably absent in the debate — that of business associations, such as the Downtown Denver Partnership and the Metro Denver Chamber of Commerce.

Both groups initially took a non-committal position when asked whether they support the proposals, other than saying the city must strike a balance between maintaining a competitive tax structure and finding money for its priorities. 

By doing so, both groups effectively decided not to fight sending the two proposals to the ballot. In the two weeks since they were contacted, both groups have taken position on the measures.

The metro chamber came out in support of the tax hike to fund Denver Health, but the proposal to increase Denver taxes by 0.5% divided its board, according to a spokesperson with the chamber.

Specifically, some board members want to see metrics incorporated into the affordable housing tax measure before they can throw their full support behind it. 

Here's how the sales tax in Denver works

Carly West, its vice president of government affairs, said the chamber is “looking closely at these proposals on behalf of our business community.”

“Maintaining economic competitiveness in the region is a top concern, but we know that availability and affordability of housing to attract and support workers and sufficiently funding critical services are all part of that economic competitiveness,” West said. “At the same time, we also need to maintain a competitive tax structure to attract and maintain businesses here.”

The city has to strike a “balance” between those priorities, which West called “critical,” and said the chamber will be “digging in” to the proposals to see if they “get that balance right.” She added it will be important to the chamber to see accountability and transparency, so it knows the sales tax rate increases, especially for affordable housing, achieves their stated purposes.

The chamber doesn’t object to using sales taxes to fund priorities “in principal,” the chamber said, but reemphasized the need to strike a balance with taxation.

The Downtown Denver Partnership, meanwhile, also decided to wait.   

Last week, the Downtown Denver Partnership decided to throw its support behind both measures, with spokesperson Britt Diehl citing the “critical services” that Denver Health provides to the city. Diehl said the partnership sees both measures as an important way to support Denver, where “all can grow and thrive.” 

“Housing affordability continues to be one of our city and state’s most pressing issues, impacting quality of life and competitiveness alike,” She told The Denver Gazette on Monday. “Public health and housing represent two of our policy priorities.”

The partnership has received millions of dollars from the city, part of Denver’s campaign to revitalize downtown Denver. Recently, the city’s Business, Arts, Workforce & Aviation Services Committee approved a contract with the Downtown Denver Partnership to manage $1.7 million in federal funding to support small businesses and attract new ones. 

The city previously gave the group $3 million to award up to $17,000 grants to support businesses impacted by the 16th Street Mall’s construction and $275,000 for creating a brand for the mall’s reopening.

A spokesperson with the partnership said the group will likely be able to share its position around Labor Day.

In the past, the partnership has supported a number of sales tax rate increases, deciding on a case-by-case basis, according to Britt Diehl, a spokesperson for the partnership. 

Thinking of living in Denver? Here's how much taxes you'll likely pay — and where it goes

The local think tank Colorado Fiscal Institute, which broadly sees sales taxes as a “regressive” form of finding revenue, said it offers an advantage by capturing money from tourism.

“We normally aren’t a fan of sales tax since they are very regressive,” said senior economist Chris Stiffler, noting the familiar argument that a sales tax hike places a disproportionate burden on lower-income residents.

“Normally, we’d say pair a modest sales tax increase with some type of offset like a targeted income tax credit to those low-income households,” he said. “That’s doable at the state level, maybe a little harder at the Denver level since Denver doesn’t collect income taxes.”

While not a fan of a sales tax increase, Stiffler said it does have a benefit that an income tax or tax credit wouldn’t capture — tourism.

Tourists in Denver account for about a fifth of sales taxes paid, according to modeling from the Colorado Fiscal Institute.

And prices for businesses will likely not see much of an impact, Stiffler said, since a sales tax increase will raise the total paid by the consumer, rather than the sticker price.

As for inflation, which has been a worry for many consumers lately even as it appears to be cooling, Stiffler said it is difficult to predict the revenue impact to the city.

Much depends on consumer spending, he said, which the institute typically likes to see growing at around 3% to 4% year over year. It currently sits at 2.4%.

If approved, these two sales tax rate increases will be the seventh and eighth such increases Denver voters have adopted in six years, and the eighth and ninth since 2006. The first sales tax hike from 2006 increased the rate by 0.15 points, and the money was earmarked for the Denver Preschool Program.

In 2018, voters approved four tax rate increases totaling 0.66 points.

These were followed by a pair in 2020 totaling 0.5 points.

Here’s a list of the tax rate increases:

• Nov. 7, 2006: 1A, Denver Preschool Program, 0.15 points

• Nov. 6, 2018: 2A, Trails and Open Space (Parks), 0.25 points

• Nov. 6, 2018: 300, College Tuition (Prosperity Denver), 0.08 points.

• Nov. 6, 2018: 301, Mental Health (Caring for Denver), 0.25 points.

• Nov. 6, 2018: 302, Feed Denver Kids (Healthy Food), 0.08 points.

• Nov. 3, 2020: 2A, Climate Protection, 0.25 points.

• Nov. 3, 2020: 2B, Housing and Shelter, 0.25 points.

With sales taxes possibly going up, when can Denverites expect them to come down?

“I wouldn’t speculate on that,” Stiffler said. “I will add that consumers continue to shift their purchases toward services instead of tangible goods.”

He added: “Since many services aren’t subject to sales tax, this overall reduces the sales tax base requiring higher rates to generate the same amount of revenue.”