An effort to revive a proposal that gave tax relief to hotels and restaurants at the height of the COVID-19 pandemic won broad support in the House, which passed the legislation on Monday.
House Bill 22-1406 allows hotels and restaurants to deduct up to $70,000 from their net taxable sales for up to five locations each month from July through September of this year and retain the sales tax collected.
Budget analysts have estimated that under the legislation, restaurateurs will keep about $2,000 in sales taxes per site.
The measure, if enacted, will cost the state about $40 million in foregone revenue.
Tax relief is not new. Governor Jared Polis signed a similar measure two years ago.
This bill provided hotels and restaurants with the same tax relief for four months. The governor and members of the General Assembly renewed that legislation for three months last year and expanded eligibility to caterers, food service providers and hotel food services.
Rep. Leslie Herod, D-Denver, one of the bill’s sponsors, said the legislation would provide tax relief at a time when restaurants and hotels — among the hardest-hit industries during the pandemic — are doing faced with rising costs due to a tight labor market.
“This legislation will save thousands of restaurants and retailers $40 million this summer to help them meet rising costs and fill the vacancies they need to grow,” Herod said. in a press release.
“Restaurants are the lifeblood of our communities and local economies across the state. Helping them save money helps all of Colorado,” added Rep. Dylan Roberts, D-Avon.
The Department of Revenue estimates that approximately 8,600 retailers would take advantage of the program each month and claim the exemption.
According to a study by the American Hotel & Lodging Association, hotel net taxable sales from food services and drinking places represent approximately 20% of hotel taxable revenue.
The bill’s next stop is the State Senate.