North Texas lawmakers file ‘permanent commission capital’ bills to help small businesses

As the Texas legislative session gains momentum, several new bills have been introduced, including some that could help small businesses.

Senator Tan Parker (R-Flower Mound) and Rep. Giovanni Capriglione (R-Keller) filed SB 1541 and HB 3395 aimed at protecting Texas merchants from high fees when they must collect taxes on behalf of state and local governments.

According to the Texas Restaurant Association, which backs the measure, the fair tax bill will save Texas businesses more than $587 million a year without creating new costs for the Texas government or consumers.

“We are incredibly grateful to Senator Parker and Rep. Capriglione for introducing fair pay legislation in Texas,” said Emily Williams Knight, Ed. D., president and CEO of the Texas Restaurant Association. “Scan fees have become one of the top expenses for restaurants, second only to food and labor, requiring even small, family-run restaurants to spend thousands of dollars a year collecting taxes that they must return to our government. Restaurants play a vital role in our economy and our communities; we should not expect these big businesses to pay high fees to collect our government’s taxes.”

Like laws passed in other states, the Texas Fee Fairness Act prohibits banks and card companies such as VISA and Mastercard from charging merchants fees when collecting sales taxes, alcohol, hotel stays, and other consumption taxes on behalf of government.

“Basically, when businesses collect tax revenue not for themselves but for the government, they don’t have to pay a commission to a third party for it,” said Kelsey Erickson Streufert, director of public relations for the Texas Restaurateurs Association. “And especially with inflation, the cost of these scrolling fees for restaurants has really skyrocketed in recent years. These are usually the third most expensive restaurants after food and labor.”

Currently, merchants such as restaurants, hotels, and retailers pay card operators a 2 to 5 percent fee on every transaction, including any taxes they must collect and send to the government. TRA said businesses have very little control over these costs because they are required by law to collect taxes.

These fees have also increased since the pandemic as more people use credit cards and move away from cash. The data shows that almost 67% of payments are made using a credit or debit card.

“Our family-run stores operate on a small margin, where every penny counts,” said Annie Spielman, director of the Texas NFIB. “Unfortunately, as per-swipe fees have more than doubled since 2012, those margins continue to shrink. The skyrocketing inflation acts as a multiplier as the rollover fee is a percentage of each sale. Our members are grateful to Senator Parker and Representative Capriglione for introducing this legislation so that small business owners can continue to keep their doors open and meet the needs of their customers.

A number of human rights groups support the law. If adopted, it will enter into force in September this year. The current legislative session will end on May 29.

“Retailers are proud to help power Texas’s economic engine, which relies heavily on our state’s business-friendly environment,” added John McCord, executive director of the Texas Retailers Association. “The legislation proposed by Senator Parker and Congressman Capriglione will help fight inflation, curb consumer spending and spur economic growth.”

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