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House approves bill to stop merchants from paying card-network fees on taxes
Summary
The Colorado House passed Senate Bill 134, which would bar merchants from being charged interchange ("swipe") fees on state and local taxes collected from customers; sponsors said it targets relief for small restaurants, while some lawmakers warned of cost-shifting and unintended consequences.
The Colorado House on May 5 passed Senate Bill 134, a measure designed to prevent merchants from being assessed interchange fees on the portion of credit-card transactions that represents state or local taxes. Sponsor remarks framed the bill as narrow relief for restaurants and other small merchants that act as pass-through collectors for government taxes.
"Senate bill 134 is bringing needed relief to our restaurant small businesses across the state by reducing the amount of fees they are paying on credit card transactions," the sponsor said, describing the change as a targeted exemption that would stop merchants from paying interchange fees on tax amounts they simply collect and remit. The floor sponsor told colleagues the change would yield about $217 million in savings for local businesses in Colorado.
Majority Leader Duran backed the bill, saying lawmakers heard from restaurants and small-business owners that the savings could help them stay open, hire staff and cover benefits. "This is a very simple bill," Duran said, arguing the relief could translate into $8,000 to $10,000 annually for some small businesses.
Opponents questioned who ultimately would bear the cost. Representative Luck said small businesses already perform the state's tax-collection role and should not carry those costs, but also warned it may be unfair to shift the burden to banks. "If we want someone to do something for us, we should be prepared to pay for it," Luck said, urging lawmakers to consider alternatives such as tax write-offs or a revival of vendor reimbursement fees.
Representative de Graaf called the bill "a bone" that risks unintended consequences and framed the dispute as one of who absorbs transaction costs — businesses, banks, or taxpayers. "My concern about this, my main concern about this bill, is what are the unintended consequences?" de Graaf said during debate.
After extended discussion, the House passed Senate Bill 134 by voice vote. The sponsor urged members to support the measure as targeted relief for small businesses; opponents said the bill deserved careful scrutiny for cost, complexity and potential market impacts.
What's next: The bill passed the House on second reading and was placed on the calendar for third and final passage; members also listed the bill as a special order earlier in the day.
