A coalition of Texas business organizations is pushing lawmakers to advance legislation that would provide fair compensation for businesses serving as tax collectors when processing credit card transactions. House Bill 2428, the Fair Business Reimbursement Act, seeks to modernize a decades-old reimbursement system that currently disadvantages retailers. Under the current system, businesses absorb processing fees ranging from 2 to 3 percent on credit card transactions, including sales tax amounts. Existing law permits only a 0.5 to 1.75 percent reimbursement, a policy established when cash transactions were predominant. This outdated approach particularly burdens small and minority-owned businesses operating on minimal profit margins.
The proposed legislation, authored by Vice Chair Terry Canales, would increase the reimbursement rate to 2.5 percent for credit card and digital transactions. This adjustment aims to provide financial relief while maintaining the total tax revenue owed to the state. JR Gonzales, Vice Chairman of TAMACC, emphasized the critical nature of the proposed change, stating that businesses are seeking equitable treatment, not a subsidy. The bill reflects practices already implemented in more than half of U.S. states, potentially enhancing Texas' economic competitiveness.
Supporting organizations include the Texas Hotel & Lodging Association, Texas Food and Fuel Association, and the Neighborhood Beer Garden and Bar Association of Texas. These groups argue that the current system effectively penalizes businesses for fulfilling their tax collection responsibilities. By updating the reimbursement mechanism, the proposed legislation could provide meaningful financial support to small and mid-sized businesses, which form the backbone of Texas' economic ecosystem. The bill represents a targeted approach to addressing systemic inequities in the state's tax collection framework.
