A coalition of Texas business organizations is advocating for the passage of House Bill 2428, known as the Fair Business Reimbursement Act, to modernize the state's outdated reimbursement system for businesses that process credit card transactions. Currently, businesses are reimbursed at a rate significantly lower than the processing fees they incur, which range from 2 to 3 percent, including sales tax amounts. This discrepancy places a disproportionate burden on small and minority-owned businesses, which operate on thin 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 alleviate financial strain on businesses while ensuring the state's tax revenue remains unaffected. JR Gonzales, Vice Chairman of TAMACC, highlighted the bill's focus on equitable treatment for businesses, emphasizing that the goal is fairness, not financial aid.
Support for the bill comes from a variety of business associations, including the Texas Hotel & Lodging Association and the Texas Food and Fuel Association, who argue that the current system unfairly penalizes businesses for their role in tax collection. By aligning Texas' practices with those of over half the U.S. states, the legislation could enhance the state's economic competitiveness and provide crucial support to the small and mid-sized businesses that are vital to Texas' economy.
The Fair Business Reimbursement Act represents a significant step toward addressing long-standing inequities in the tax collection process, offering a potential model for other states grappling with similar challenges. Its passage could mark a pivotal moment for Texas businesses, particularly those most vulnerable to the financial pressures of the current system.
