Georgia bill would raise vendor compensation for collecting sales tax to aid small retailers

Chairman Yurda presented House Bill 439, a proposal to raise the vendor compensation merchants may retain when reporting and remitting state and local sales taxes.

The bill would change the current allowance — in which vendors may retain 3% of the first $3,000 of remitted tax and 0.5% of tax collected above $3,000 — to retain 3% of the first $10,000 and 0.5% of tax collected above $10,000, with a provision in the bill text for the rate on tax above $10,000 to increase to 1.5% over time. Representative (unnamed) asked for a fiscal note; Chairman Yurda said a fiscal note was being prepared and was expected soon.

Why it matters: Vendors currently receive a small reimbursement for the administrative cost of collecting sales tax. Bill sponsors and business groups say the increase will put more money on the bottom line of small retailers; county and local government representatives cautioned that the change would reduce the amounts remitted to local governments because the retained vendor compensation is not remitted to the Department of Revenue and is instead excluded from the local-sales-tax distribution.

Supporters from the retail trade told the committee the increase would help family-owned stores and convenience stores. Angela Holland, president of the Georgia Association of Convenience Stores, said the association represents roughly 9,000 stores and thanked Chairman Yurda for seeking to “make retailers in this state whole on their expenses to remit state and local taxes.” Sheila Humberstone of Stonebridge Consulting, speaking for the Georgia Food Industry Association, said grocery-store members supported the bill.

Dante Bridal of the Association County Commissioners of Georgia (ACCG) urged caution and emphasized the need for the fiscal note. “Any change in that rate…is going to have a much larger impact for those large businesses than the smaller businesses,” Bridal said, and he said he “eagerly await[ed] that fiscal note.” County representatives asked several times how the change would affect local revenues; Bridal explained that increased vendor retention reduces the pool of tax revenue shared with local governments.

Committee members also noted the current compensation allowance had not been increased in many years. Chairman Yurda told the panel that Department of Revenue records showed the vendor compensation had not been increased since at least 2005. Several members said they did not want to take a vote until the fiscal note was available.

The committee did not vote on the bill at the hearing; members asked staff to provide the fiscal note and indicated they would reconvene before crossover to consider a vote.

The hearing included multiple business and industry representatives in support and several committee members pressing for fiscal projections before any vote.