Revenue will support the state road repair, transportation sustainability efforts
The state of Colorado is imposing a 27-cent fee on deliveries to help fund sustainable transportation and road maintenance.
The law, which took effect on July 1, assesses a fee on motor vehicle deliveries with at least one item subject to state sales or use tax. Eligible deliveries include any taxable goods shipped, delivered or otherwise transported by motor vehicle to a purchaser.
Companies from FedEx and the U.S. Postal Service to food delivery will be charged the new fee, and customers are likely to see it reflected on their bills.
The fees are projected to generate about $75.9 million of revenue in their first year, according the Colorado Legislative Staff Council.
Durango Chamber of Commerce Executive Director Jack Llewellyn said the fees will mostly affect large businesses, but many smaller businesses are not aware of the new fee.
A chamber survey found that many Durango businesses did not know about the additional charge.
“There’s probably about 120 respondents roughly in the survey, I want to say like around 67% of our members did not know about it,” Llewellyn said. “So a lot of small businesses are very unaware that it’s supposed to be added on.”
Llewellyn said the fee mostly provides revenue to repair road wear and tear. He said as vehicles become more fuel efficient and the popularity of electric vehicles rises, the state loses revenue generated by the gas tax, which can also be used for road maintenance.
“You’re losing that revenue, where the gas tax is generated,” he said. “And so they’re trying to figure out how they can make some revenue for the wear and tear.”
The Colorado Department of Revenue website says “retailers with an active sales tax account, a retailer license, and any sales tax liability reported after January 1, 2021, will be automatically registered for a retail delivery fee account by July 1, 2022.”
The department also says retailers cannot opt out of automatic registration. The retail delivery fee will be paid and reported on a new return form, DR 1786. Delivery fees will also be implemented for third-party delivery services, such as DoorDash and Grubhub.
Durango Business Improvement District board chairwoman and co-owner of Zia Taqueria Carly Van Hof Thomson said she hasn’t seen a huge impact from the delivery fees but will know more near the end of the month when she reports the added fees to the Department of Revenue. She said Zia will only have to pay this fee when it caters because it does not offer delivery service.
“It seems like for me, it’s just a lot of extra time and energy for what I think is going to be a very low impact at 27 cents per delivery,” she said.
She said the price of gas is more likely to affect her business than the delivery fee. She also has not received complaints from customers about the newly added fee but feels tracking delivery fees is an annoyance for businesses.
“I don’t think there’s a lot of pressures on our costs. Twenty-seven cents per delivery is probably the least of my worries in terms of the pressure that’s associated with inflation right now,” Van Hof Thomson said.
Fees are distributed to the Highway User Trust Fund, the Multimodal Options Fund and cash funds for each of the four enterprises created in the bill. The four enterprises include air quality, community access, clean fleets and clean transit.