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Senate adopts bill ending state sales-tax vendor fee, prompting debate over small-business costs
Summary
The Colorado Senate passed House Bill 1005 to eliminate the statesales-tax vendor fee starting Jan. 1, 2026. Supporters said the vendor fee is an outdated subsidy; opponents said the change burdens small retailers and urged delay or referendum. Multiple amendments were proposed and defeated; the bill passed on final reading.
The Colorado Senate on Aug. 24 passed House Bill 1005, a measure to eliminate the state sales-tax vendor fee that lets retailers retain up to 4% of collected state sales tax (capped at $1,000 per filing period). Sponsors said the allowance dates to the 1930s and is no longer justified; opponents said its removal will impose new costs on small businesses.
Supporters argued the vendor fee is a legacy allowance that became a de facto subsidy and that federal tax changes made the state policy outdated. "Every dollar we give away through an outdated vendor discount is a dollar we take away from kids in classrooms, from seniors who need health care," said Senator Kipp, a sponsor, urging passage.
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