Currently, businesses that use government-owned property for private benefit pay a property tax based on the market value of what is known as their “possessory interest.” Amendment U, which was referred to voters by the state legislature, would eliminate that tax in instances where the market value of the property is less than $6,000, and adjust that figure for inflation every two years.
There are about 7,000 such interests in Colorado that represent a tiny fraction of the state’s taxable property and generate about $7 million in taxes each year. The amendment’s exemptions would cover about 5,100 of those interests that produce an estimated $125,000 in annual tax revenue statewide.
The Colorado Blue Book provides some examples:
“Some ranchers lease land from the federal government for cattle grazing. Other businesses lease land to provide a recreational activity, such as skiing or river rafting, or are given a contract to provide a specific service on public land, such as operating a snack bar at a national park.”
The argument in favor of the amendment focuses on cutting the cost of an administrative burden that in many cases exceeds the tax — particularly in the instance of agricultural leases that often generate less than $10 in taxes against costs of things like mailing notices and tax enforcement.
Weighing against that is the contention that Amendment U would provide an unfair tax break for those businesses that use government land for private benefit, even though the amount of the tax may be relatively small.
More details on Amendment U can be found in the Colorado Blue Book.
