A coalition of Texas business organizations is advocating for the passage of House Bill 2428, known as the Fair Business Reimbursement Act, to update the compensation businesses receive for collecting sales tax through credit card transactions. Currently, businesses face a significant financial burden, absorbing processing fees of 2 to 3 percent on these transactions, including the sales tax amount, while only being reimbursed at a rate of 0.5 to 1.75 percent. This discrepancy stems from a reimbursement system established during a time when cash transactions were more common, placing an undue strain on small and minority-owned businesses that operate with slim profit margins.
The proposed legislation, introduced by Vice Chair Terry Canales, seeks to adjust the reimbursement rate to 2.5 percent for credit card and digital transactions. This change is designed to offer financial relief to businesses without reducing the total tax revenue collected by the state. JR Gonzales, Vice Chairman of the Texas Association of Mexican American Chambers of Commerce (TAMACC), highlighted the importance of this adjustment, stating that the goal is equitable treatment for businesses acting as tax collectors, not a subsidy. The bill aligns with practices already in place in over half of the U.S. states, suggesting that its adoption could improve Texas' economic competitiveness.
Support for the bill comes from a variety of business organizations, including the Texas Hotel & Lodging Association, the Texas Food and Fuel Association, and the Neighborhood Beer Garden and Bar Association of Texas. These groups argue that the current system unfairly penalizes businesses for fulfilling their role in the tax collection process. By revising the reimbursement mechanism, House Bill 2428 could provide crucial financial support to small and mid-sized businesses, which are vital to the Texas economy. The legislation represents a focused effort to correct longstanding inequities in how the state compensates businesses for their part in tax collection.
