Colorado Gov. Jared Polis today vetoed legislation to prohibit the collection of interchange fees for sales taxes, saying it presented too much legal risk to the state’s business environment and consumers.
Passed last month by the Colorado General Assembly, the legislation would have prohibited payment card networks and financial institutions with more than $60 billion in assets from charging interchange fees on sales taxes. It was modeled after a similar law in Illinois that a federal court mostly struck down earlier this week.
Polis pointed to the court decision in his veto message. He also pointed to actions by the Comptroller of the Currency and National Credit Union Administration to defend the preemption of federal law over state laws like the one passed in Illinois.
“Even if the bill were to survive legal scrutiny and go into effect in our state, it is questionable whether this bill is fully implementable or operationally feasible,” Polis said. “This would be a Colorado-specific carve-out to the national and global integrated payments system and it is unclear to me how the state would implement it.”
In a statement, American Bankers Association President and CEO Rob Nichols welcomed the veto, saying it spared Colorado business and consumers “from the payment chaos it would have unleashed — while also sparing the state from a costly and uphill legal battle.
“The governor’s action, as well as a federal court ruling in Illinois this week, should send a clear message to any other state contemplating similar legislation that it is a mistake,” Nichols said. “We express our appreciation to the Colorado Bankers Association and other local stakeholders for their efforts to highlight the harm this flawed bill would have brought to the people of Colorado.”
