O&A Masthead

Colorado News —
September 2015

Columnist — Joyce Trent

DENVER — Gasoline prices in the state have spiked sharply in a short period of time.

For most of this year Colorado ranked well below the national average. But in mid-July prices started to climb and soon, not only caught up, but exceeded those figures.

In just two weeks the average price of unleaded regular went from $2.63 to $2.76 a gallon. This came despite the production of the most crude in U.S. history.

Colorado flag

Moving into August pumping a gallon of gasoline in Colorado meant $2.80 out of the consumer's pocket, while the national average remained steady at $2.65.

Industry analysts attributed the rise to an unexpected need for maintenance at one of the supplying refineries and to the annual addition of a summer blend additive to control air pollution. Colorado has only one refinery and depends on other states to meet demand.

The WRB refinery, a major supplier, in Borger, TX, had problems with its Fluid Catalytic Cracking (FCC) unit.

DENVER — After years of non-stop expansion in Colorado, 7-Eleven is planning to sell three of its gas stations and convenience stores here as part of a general off-loading of stores in ten states.

Stores in Loveland, Salida and Walsenburg will be up for auction in September. The corporation is dropping 22 others in Nevada, Illinois, Texas, West Virginia, Florida, New York and South Carolina.

They "simply do not fit 7-Eleven's current business model," said Robbie Radant, vice-president of mergers and acquisitions.

But Radant says the three represent good investment opportunities for some.

7-Eleven has more stores in Colorado than any other chain, although Kum & Go is on a mission to change that.

AURORA — Car washes and laundries have beat back an attempt by the city to levy a 3.75 sales tax for use of coin-operated machines that was on the books but never collected.

The city claimed that the businesses were subject to the tax because they rent their equipment to customers.

Following an uproar from the 16 self-service washes, 24 in-bay washes, 22 laundries and a handful of massage chair operators the city council decided the $300,000 the tax would have raised was not worth the wrath of the businessmen affected.

"This is really taxing the poor," concluded City Councilwoman Sally Mounier in a five-to-two vote against imposing the tax. For councilman Bob Roth opposition to the tax became a crusade.

The issue arose when city officials conducting a routine audit of a coin-operated car wash discovered the tax was not being collected. An investigation showed the problem was city-wide. Recent decisions in other metro municipalities lead the tax and licensing division of the city to recommend to the council that the tax be collected this summer.

"We collect more than two-thirds of our budget from sales tax," said Councilman Bob Broom who voted to enforce the tax. "We can't pick and choose who we're going to tax."

The businesses maintained as they were providing a service and not tangible personal property they are exempt.

And, unlike other businesses, "a car wash can't charge sales tax to customers nor can a laundry shorten the wash to reduce cost,"said John Zayac, owner of Pro Clean Auto Washes.

It would cost $30,000 to switch to digital machines to accept credit or debit cards to collect a tax percentage of payments made exclusively in quarters. "How are we supposed to add pennies to a quarter?" asked Zayac. Others said the change would result in double taxation as they would also have to pay sales tax when purchasing the equipment.

Perhaps the most unusual argument came from a coin-operated laundry owner who said the tax would affect health and crime rates.

"Health goes up because of clean clothes, and people can work with good clean clothes, which makes crime go down," said Yemane Habtezgi, owner of Laundry on the Fax. If laundries have to go out of business because of the tax the city would lose one hundred dollars for every dollar gained, he said.

The city proposed waiting until 2017 to implement the tax to give businesses time to adjust, then decided not to collect it at all based on the "ill-will and backlash" it would create.

City Attorney Mike Hyman said since the taxing of those businesses was already part of the city tax code legislation would have to be crafted to exempt them.

The decision does not affect state sales tax as Colorado exempts the short-term rental of equipment from paying sales tax. The only tax paid now covers items purchased in vending machines such as detergent and other cleaning supplies.

COLORADO SPRINGS — Watch out for those teen-age spies.

A group of kids ranging from 11 to 17-years old are dropping into convenience stores to see if they are enabling tobacco manufacturers to seduce youth.

They are part of the El Paso County Public Health Campaign called "Tobacco Targets Youth."

On a recent foray six youngsters went into a store in a low-income neighborhood and feigned interest in snacks as they looked for the evidence. They said they identified two-for-one deals on gum tobacco, cigarette posters promising an "experience," and right next to candy and chips e-cigarettes with flavors like bubble gum.

The teens publicize the findings in fliers and on TV in an effort to educate the public about the tobacco industry's efforts to induce teenagers to start smoking in hopes they will develop lifelong customers. Teens in low-income neighbors are especially targeted, they say.

Some of the kids who participate say they are motivated by the fact their parents started smoking at a young age and have struggled to stop.

DOUGLAS COUNTY — Gevo Inc., a biofuels producer based here, has persuaded the first gas station in the U.S. to sell gasoline blended with Gevo's isobutanol at the pump.

Express Lube of Fredericksburg Tex., is the first of what Gevo hopes will be many retail locations to offer its product as the company markets the isobutanol to the marina, outdoor equipment and off-road gasoline markets.

A Gevo spokesman said owner Adam Sheffield likes the moisture resistance and capacity to reduce engine corrosion and believes it is ideal for vehicles that are used intermittently such as farm equipment, weed eaters and mowers.

DENVER — Convenience store owners are struggling to understand the fine points of recent amendments to a law forcing them to charge tax on food items.

Colorado eliminated the tax exemption for non-essential food items and packaging that comes with food or beverages. Those items are taxable at the sales and use tax rate of 2.9 percent.

The definition provided is that non-essential items are those sold primarily for convenience and are not necessary to effectuate the sale of food.

This causes a dilemma as pizza is not taxable but the box necessary to carry it from the store is. If the store puts the customer's milk or bread in a bag the bag is taxable. But that means the entire item and its packaging must be taxed because there is no way of separating them on the books.

"How can you sell coffee or soda without a cup or a soda without a lid or straw?" asked one store operator. Even a toothpick or stir stick is taxable.

Originally published in the September 2015 issue of the O&A Marketing News.
Copyright 2015 by KAL Publications Inc.

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