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Senate advances bill to end Coloradovendor fee, setting up final vote
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Summary
After hours of floor debate and multiple failed amendments, the Colorado Senate voted on Aug. 24 to advance House Bill 1005, which would eliminate the state sales-tax vendor fee retailers may retain; sponsors said itremoves an outdated subsidy, while opponents said it shifts costs onto small retailers and consumers.
The Colorado Senate advanced House Bill 1005 on second reading Aug. 24, ordering the measure to the calendar for a final vote after extended floor debate over whether the state should end the sales-tax vendor allowance that retailers keep to cover collection costs.
The billsponsor, Senator Kipp, told colleagues the vendor allowance was created in 1939 and no longer fits modern tax administration. "Businesses nationwide will benefit to the tune of $1,300,000,000,000, that is trillion with a t," he said in floor remarks arguing that federal tax changes mean Colorado must prioritize state services and eliminate the outdated allowance.
Opponents said the allowance is a necessary reimbursement for retailers that have become the states tax collectors. Senator Kirkmire warned the repeal would "force many small businesses to cover the cost of collecting taxes out of their own pockets," noting testimony in committee that collection costs can exceed the $1,000 cap some retailers receive per filing period.
Lawmakers offered and debated a string of amendments intended to blunt the bills impacts or refer it to voters. Senator Sturgeon proposed amendment L16 to send the change to a public vote under the Taxpayer Bill of Rights (TABOR); the amendment was defeated on the floor. Other proposals to delay the effective date, remove penalties for late filings, or narrow the repeal were also voted down or withdrawn.
Supporters of the repeal said the measure yields one-time revenue to help close near-term budget gaps created in part, they said, by federal tax changes. Opponents said the cut would instead create ongoing costs for small retailers, potentially leading to higher prices, fewer hires or business closures. "We're not paying them enough in the first place," Senator Kirk Meyer said of retailers; "now we're taking that away."
The committee reported the bill passed second reading and placed it on the calendar for third reading and final passage. The Senate recorded that House Bill 1005 passed second reading and was ordered to third reading with a counted vote recorded in the report.
What happens next: HB1005 is scheduled for third reading and final passage on the Senate calendar. If passed, the bills provisions would take effect on the date stated in the text unless amended on final passage.
