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Taxaholics of the day: Denver moves to tax cooking oil

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By Michelle Malkin  •  June 1, 2009 11:32 AM

Saw this yesterday in the Denver Post. Restaurants in the Mile High City are fried over the latest tax grab:

Colorado Restaurant Association Big Cheese Pete Meersman is afraid the city of Denver’s Department of Revenue is jumping out of the frying pan and into the fryer.

At issue? During some recent restaurant-industry audits, the city has claimed separate sales tax on frying oil, claiming that the oil is a separate product because it is not absorbed into the product.

Try telling that to a cardiologist who wants you to cut down on French fries.

“Let’s say you have a grilled cheese sandwich restaurant,” Meersman said. “All the products you get in — including the oil, bread, cheese, garnishes — you don’t pay sales tax on because you’re going to turn around and add all those costs up, charge a price and the customer pays sales tax on top of that.

“The problem with trying to collect sales tax on wholesale cooking oil is that it is already being taxed on the retail side.”

The city’s vigilance in trying to collect a separate tax on oil has boiled to the point where Sysco Denver Food Service Co., the largest food-service distributor in the Rocky Mountain region, is disputing a $90,000 tax assessment on fry shortening.

“It’s a new interpretation by someone new in city government to try and tell us shortening is not part of the food,” said Sysco president Chris DeWitt. “We’ve never been taxed (on oil) before. This puts an undue hardship on the distributor who eventually must pass that cost along to our (restaurant) customers.”

…What’s next, he argues? “Are they going to start charging sales tax on potato peelings? Uneaten chicken bones? The water that’s used to boil pasta? Clam shells?

Soon, “Mile High” will refer to the mountainous stack of taxes driving businesses out of the state.

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