An ordinance that takes effect next year will cap the fees businesses receive for collecting sales taxes for the City of Grand Junction.
Capping the sales tax vendor fee at $500 a month per account is expected to affect 31 businesses, but save the city between $365,000 and $375,000 a year — money earmarked for economic development.
The Grand Junction City Council approved the ordinance implementing the cap.
“This is something the city has been reviewing for some time that simply makes sense,” said Grand Junction City Manager Greg Caton. “The fee was originally implemented at a time when the administrative effort that went into collecting city sales tax was much more cumbersome. Technology has greatly improved that situation, so we felt it was time to reassess.”
Caton said the city worked with the Grand Junction Area Chamber of Commerce and Grand Junction Economic Partnership on the cap as well as plans to create a funding source for economic development.
Out of 72 home rule municipalities in Colorado that administer and collect sales taxes, 30 allow no vendor fee and 22 have instituted caps that average $170 an account.
In Grand Junction, the cap is expected to affect 31 businesses out of 4,800 sales tax accounts. Most of those are large, non-locally owned businesses that retained between $16,000 and $97,000 a year in credits against sales tax collections. A business subject to the cap would have taxable sales in excess of $500,000 a month — or $6 million annually.