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DENVER – Colorado has begun to look into eliminating or suspending $19 million in tax breaks after the governor told lawmakers the state budget needed another $50 million cut, the Associated Press reports.

On the table is taxing candy and soft drinks, which currently are exempt from a state tax. Also being considered are taxing Internet sales and reviving a state sales tax on software.

With the recession continuing, Gov. Bill Ritter urged the legislature to uncover solution to balancing the state budget. “We are living in a new economic reality, and it will take all of us working together as stubborn stewards of taxpayer dollars to adjust, adapt and succeed,” he said.

Marc Braunstein testified that adding tax to Internet sales would seriously harm his Internet advertising site, ShopAtHome. “The revenue won’t be there, but the job loss will be there,” he said.

But Democratic committee members were unsympathetic to Internet retailers, saying they should get into another business if it’s based on their customers avoiding sales tax payment.

Colorado has already slashed $2.1 billion from the state budget over the last 18 months and the state faces an additional $1 billion deficit in next year’s fiscal budget, which starts July 1.

But the question is not really about the budget, it is about the consumer.  People in Colorado have made high profile comments.  Some support the idea for the potential health benefits for children.  Others loathe the thought of new taxes.  But would I give up the Sprite I take to lunch every day if it cost 20% more?

I don’t think I would, but there are more price sensitive people out there who would quickly cut off the candy and pop from their diet for a price increase.

What would you do?  Please give your thoughts in the comments.