Texas Businesses Advocate for Fair Compensation in Credit Card Tax Collection

Texas business organizations are rallying behind House Bill 2428, known as the Fair Business Reimbursement Act, to address the financial burden placed on businesses that collect sales tax through credit card transactions. Currently, businesses are reimbursed at a rate significantly lower than the processing fees they incur, a system that has remained unchanged despite the shift from cash to digital transactions. This discrepancy disproportionately affects small and minority-owned businesses, which operate with thinner profit margins.

The proposed legislation, spearheaded by Vice Chair Terry Canales, seeks to adjust the reimbursement rate to 2.5 percent for credit card and digital transactions, aligning more closely with the actual costs businesses face. This change is not about providing a subsidy but ensuring fairness and equity in how businesses are compensated for their role in tax collection. The bill has garnered support from various industry groups, including the Texas Hotel & Lodging Association and the Texas Food and Fuel Association, highlighting the widespread recognition of the issue's importance.

By modernizing the reimbursement system, House Bill 2428 could offer significant financial relief to small and mid-sized businesses across Texas. These businesses are vital to the state's economy, and the proposed adjustments could help level the playing field, ensuring they are not unfairly penalized for fulfilling their tax collection duties. The legislation represents a critical step toward addressing long-standing inequities in Texas' tax collection framework, potentially setting a precedent for other states to follow.