An effort to revive a proposal that gave tax relief to hotels and restaurants at the height of the COVID-19 pandemic won wide support in the House, which passed the legislation Monday.

House Bill 22-1406 permits hotels and restaurants to deduct up to $70,000 from their net taxable sales for up to five locations each month from July to September of this year and to retain the sales tax collected.

Budget analysts estimated that, under the legislation, restaurateurs will keep about $2,000 in sales tax collections per site. 

The measure, if signed into law, will cost the state roughly $40 million in uncollected revenue.    

The tax relief is not new. Gov. Jared Polis signed a similar measure two years ago.

That bill offered hotels and restaurants 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 contractors, and hotel food and drinking 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 sectors during the pandemic – face rising costs as a result of a tight labor market.

“This legislation will save thousands of restaurants and retailers $40 million this summer to help them address rising costs and fill the open positions that they need to grow,” Herod said in a statement.

“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 about 8,600 retailers each month would take advantage of the program and claim the exemption.

Hotel net taxable sales from food services and drinking places comprises about 20 percent of taxable hotel revenue, according to a study from the American Hotel & Lodging Association.

The bill’s next stop is the state Senate.