The Colorado Sun, carrying Rae Solomon’s CPR News reporting through the Colorado Capitol News Alliance, reports that Senate Bill 134 has passed the legislature and is headed to Gov. Jared Polis. The bill would stop credit card companies and banks from charging swipe fees on the sales-tax portion of a purchase, meaning merchants would still pay fees on the meal, coat, shoes, or widget, but not on the taxes they are collecting for state and local government.
The bill has turned into one of the bigger Capitol food fights of the session, with retailers and restaurants on one side and banks and credit card interests on the other. Supporters say it would save small businesses thousands of dollars each year. Opponents warn it could trigger lawsuits, complicate payment systems, and maybe even mess with credit card rewards. Translation: when enough lobbyists show up, somebody’s ox is getting gored, and the ox apparently has a platinum rewards card.
The Bullet Point Brief
- Senate Bill 134 would remove sales taxes from the amount used to calculate credit card swipe fees. Seems simple enough: businesses should not pay a private processing toll on money they are merely collecting for government.
- The House passed the bill 45-19, sending it to Gov. Polis. Nothing says “bipartisan curiosity” like legislators agreeing that maybe banks do not need a taste of every local fire district sales-tax bump.
- Restaurants and retailers support the bill, saying it would offer real savings without raising prices. A small restaurant owner said the measure could save his two locations about $20,000 a year. That is not couch-cushion money. That is payroll, equipment, or survival money.
- Banks argue the bill would be expensive and complicated to implement because Colorado is only about 2% of national transactions. Ah yes, the classic “our system is too big to adjust” argument, beloved by every industry that enjoys the current arrangement.
- The Electronic Payments Coalition spent more than $600,000 on Facebook and Instagram ads opposing the bill. If it takes that much digital screaming to defend a fee, perhaps the fee has a little explaining to do.
My Bottom Line
This one has all the ingredients of a classic Capitol cage match: banks, retailers, restaurants, credit card companies, lobbyists, ads, legal threats, consumer warnings, and just enough “small business” language for everyone to pretend they are wearing work boots.
On the merits, I understand why businesses hate paying swipe fees on taxes. That tax money was never theirs. They collect it because government makes them collect it, then remit it because government makes them remit it. Charging a merchant a fee on that money feels like charging rent on a chair they are only holding for somebody else.
That said, let’s not act like this is some pure little Main Street prayer meeting. Big Retail likes this bill too. Walmart and Target are not hanging around the Capitol because they suddenly developed an aching concern for the diner down the road. They see savings, and they have calculators large enough to make the savings interesting.
But the banking side does not exactly arrive wearing a halo either. The warnings about reward programs, payment complications, legal fights, and two-transaction nightmares may be real concerns, or they may be the usual industry fog machine warming up before the governor makes a decision. When an industry spends hundreds of thousands of dollars on ads, I assume the stakes are high and the grift is good.
So here is where I land: businesses should not be charged swipe fees on taxes they collect for government. That is a defensible idea. But Colorado should also go into this with eyes open, because every “simple fix” at the Capitol has a way of growing extra legs once the lawyers, lobbyists, and regulators start feeding it after midnight.
Source: The Colorado Sun
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