Proposal would cap sales tax reimbursing

Big-box stores such as Wal-Mart would take a hit under a proposal to cap the amount businesses are reimbursed for collecting sales tax on the city’s behalf.

Colorado Springs businesses keep 2 percent of sales tax collected as compensation for the work it takes, a perk that costs the city’s general fund $2.5 million a year.

Under a proposal offered to the City Council on Monday by staff members, the monthly reimbursement for sales tax collection would be capped at $200, a move that would generate nearly $1 million a year for economic-development activities.

“Colorado Springs is the most generous out of the nine most populated cities (in Colorado) when it comes to vendor fees and what we allow vendors to retain,” said Candice Bridgers, the city’s sales tax manager.

The proposed cap would bring the Springs in line with fees offered by cities around the state, which range from nothing to 5 percent and have varying reimbursement caps, Bridgers said.

For example, Westminster has a 2.5 percent vendor fee with a $100-per-month cap.

While only about 3 percent of Springs businesses would be affected by such a cap, those businesses are the big ones.

General merchandising stores such as Safeway and Wal-Mart account for a quarter of the businesses that would be affected, followed by construction material suppliers and auto dealers.

Safeway representatives did not return phone calls seeking comment Tuesday.

In an e-mail, Wal-Mart spokesman Joshua Phair said the chain was disappointed by the proposed cap.

“Colorado Springs has been the model business-friendly community and we look forward to continuing to work with the city, but increasing the burden to local businesses and consumers does not seem like an ideal solution in this case,” Phair said.

City officials estimate bigbox stores retain a median of $500 a month without a cap on the reimbursement.

Steve Bartolin, president of The Broadmoor, called the proposed cap a tax increase on business, but one he is willing to pay because it affects all businesses equally.

The proposed cap would mean The Broadmoor could lose as much as $97,600 each year.

“We’re a big enough business, we can absorb that,” Bartolin said.

Goodwill Industries would see about a $1,000 annual loss if the cap were implemented, said spokeswoman Melissa Lyby.

The $964,000 a year the proposal would generate would go to economicdevelopment programs, including $230,000 to create, staff and operate a retail-enhancement program for the city.

Speaking as a local resident, Bartolin said he would support higher property taxes to ease local governments’ dependence on sales tax.

“Long term, as a city it seems that we need to balance our taxation a little more,” he said. “You just can’t keep putting all the burden on businesses.”

CONTACT THE WRITER: 636-0232 or carlyn.mitchell@gazette.com