Colorado § 39-29-106 - Tax on the severance of coal.

§ 39-29-106. Tax on the severance of coal.

(1) In addition to any other tax, there shall be levied, collected, and paid for each taxable year a tax upon the severance of all coal in this state. Such tax shall be levied against every person engaged in the severance of coal. Subject to the exemption and credits authorized in subsections (2), (3), and (4) of this section, the rate of the tax shall be thirty-six cents per ton of coal.

(2) (a) Repealed.

(b) On and after July 1, 1999, but before January 1, 2026, no tax provided for in subsection (1) of this section is imposed on the first:

(I) Three hundred thousand tons of coal produced in each quarter of the 2021 taxable year;

(II) Two hundred forty thousand tons of coal produced in each quarter of the 2022 taxable year;

(III) One hundred eighty thousand tons of coal produced in each quarter of the 2023 taxable year;

(IV) One hundred twenty thousand tons of coal produced in each quarter of the 2024 taxable year; and

(V) Sixty thousand tons of coal produced in each quarter of the 2025 taxable year.

(c) Repealed.

(3) For taxable years commencing prior to January 1, 2026, there is allowed, as a credit against the tax imposed by subsection (1) of this section, an amount equal to the percentage set forth in subsection (3.5) of this section of such tax for coal produced from underground mines.

(3.5) The percentage for the credits allowed under subsections (3) and (4) of this section is equal to:

(a) Fifty percent for the 2021 taxable year;

(b) Forty percent for the 2022 taxable year;

(c) Thirty percent for the 2023 taxable year;

(d) Twenty percent for the 2024 taxable year; and

(e) Ten percent for the 2025 taxable year.

(4) For taxable years commencing prior to January 1, 2026, there is allowed, as an additional credit against the tax imposed by subsection (1) of this section, an amount equal to the percentage set forth in subsection (3.5) of this section of such tax for the production of lignitic coal, as such coal is classified by the American society for testing and materials (ASTM) in their D 388 standard for the classification of coals by rank.

(5) For every full one and one-half percent change in the index of producers' prices for all commodities prepared by the bureau of labor statistics of the United States department of labor, the tax rate provided in subsection (1) of this section shall be increased or decreased one percent. The executive director shall determine such adjustments to the rate of tax based upon changes in the index of producers' prices from the level of such index as of January, 1978, to the level of such index as of the last month of the quarter immediately preceding the quarter for which any taxes are due.

Source: L. 77: Entire article added, p. 1846, § 1, effective January 1, 1978. L. 79: (5) amended, p. 1505, § 1, effective January 1, 1980. L. 84: (2) amended, p. 1030, § 1, effective July 1. L. 86: (2) amended, p. 1137, § 1, effective April 11. L. 88: (5) amended, p. 1344, § 2, effective January 1; (1) amended, p. 1344, § 1, effective July 1. L. 90: (2)(a) and (2)(b) amended and (2)(c) repealed, p. 1747, §§ 1, 2, effective May 25. L. 94: (1) amended, p. 334, § 2, effective March 29. L. 99: (2)(a) and (2)(b) amended, p. 926, § 4, effective May 24. L. 2008: (2)(b) amended, p. 1680, § 5, effective August 5. L. 2021: (2)(b), (3), and (4) amended and (3.5) added, (HB 21-1312), ch. 299, p. 1797, § 12, effective July 1.

Editor's note: Subsection (2)(a) provided for the repeal of subsection (2)(a), effective July 1, 1999. (See L. 99, p. 926.)

Cross references: (1) For the legislative declaration contained in the 1999 act amending subsections (2)(a) and (2)(b), see section 1 of chapter 235, Session Laws of Colorado 1999.

(2) For the legislative declaration in HB 21-1312, see section 1 of chapter 299, Session Laws of Colorado 2021.

ANNOTATION

Section establishes a tax with two components: A base rate of 36 cents per ton of coal and the non-discretionary adjustment factor that is based upon changes in the index of producers' prices. Huber v. Colo. Mining Ass'n, 264 P.3d 884 (Colo. 2011).

Prior voter approval is not required for the tax rate increase on the severance of coal that is caused by the department of revenue applying the adjustment factor in subsection (5). The voter-approval requirement for a tax rate increase only applies to an increase enacted after the constitutional requirement, but the adjustment factor was enacted prior to it. Accordingly, the rate change is a nondiscretionary, ministerial function of the department and not a tax rate increase. Huber v. Colo. Mining Ass'n, 264 P.3d 884 (Colo. 2011).