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  • Thursday, August 20, 2020 3:31 PM | Ross Hutchings (Administrator)

    The Mercury News

    Oakland business tax measure on ballot — in 2022

    Would shift from flat rate

    By ANGELA RUGGIERO | aruggiero@bayareanewsgroup.com | Bay Area News Group

    PUBLISHED: July 20, 2020 at 12:37 p.m. | UPDATED: July 21, 2020 at 4:01 a.m.

    OAKLAND — A measure that could overhaul the way businesses are taxed in Oakland will go before voters — but not until 2022.

    The Oakland City Council has agreed to place the business tax measure titled “Lift Up Oakland” on the November 2022 ballot — not the upcoming election this year.

    Currently, businesses all pay the same flat tax rate, no matter how much money they bring in, according to Councilwoman Nikki Fortunato Bas who first brought the measure to the council. The proposal aims to reinvent the ways businesses are taxed, reducing what small businesses pay while holding large corporations accountable for their fair share, she said. Instead of paying a flat rate, the ballot measure calls for a different rate structure based on gross receipts.

    “It’s not fair that one business may be paying the same flat tax rate as another who may have 10 or 20 time the revenue,” said Bas in an interview.

    Bas first proposed the measure for this November’s ballot, but instead pushed it back to the 2022 election. The change was made after some council members suggested changes to the legislation, first introduced by Bas and council members Sheng Thao and Dan Kalb. Bas said she wanted the council to “move forward in a unified fashion” and give the city more time to speak with businesses.

    The council is also expected to approve creating a “Blue Ribbon Task Force” at its meeting Tuesday. The task force would study and recommend potential tax rates to the council. The task force would not meet until January; its members would be appointed by the mayor.

    Earlier, council members who sponsored the legislation said that the tax burden would shift in large part from small businesses to larger ones. The proposal would lower taxes for small businesses such as restaurants, retail and wholesale ones that generate $250,000 or less in revenue per year. In turn, those that make more revenue would be taxed at higher rates.

    If passed, the measure would go into effect in January 2023.

    But the proposal received some criticism from speakers at last week’s council meeting. Aly Bonde, public policy director for the Oakland Metropolitan Chamber of Commerce, said it was clear no one spoke to small businesses about what they need.

    “There are many things the City Council can and should do to help small businesses immediately, but rushing a measure that could threaten every size and sector of business in Oakland is not one of them,” Bonde said.

    Passing the measure first and maybe fixing it later is a poor policymaking choice; instead, create a measure for the 2022 ballot with a commission that starts with a blank slate, she said.

    “Today, the council has taken a bold step toward making Oakland a welcoming place for small businesses, while inviting our larger corporations to make a deeper investment from which all Oaklanders will benefit,” Thao said in a statement.

    “Once implemented, this new progressive tax structure will help guide Oakland through this economic crisis and nurture the small business growth that will define the city,” she said.

    Bas said she hopes the tax measure will be more equitable for business owners.

    “There is broad consensus that we must modernize Oakland’s business tax to become more equitable and fair, and to provide relief to our small businesses, so many disproportionately impacted by COVID-19 and struggling long before the pandemic hit,” Bas said in a statement.

    In an online and telephone survey of 400 likely Oakland voters, at least 59% favored the shift in taxation. A simple majority would be required for a ballot measure to pass.

    Angela Ruggiero | Criminal Justice Reporter

    Angela Ruggiero covers criminal justice and the Alameda County Superior Court. She previously covered the Tri-Valley cities of Pleasanton, Dublin, Livermore and Danville.



  • Thursday, August 20, 2020 3:25 PM | Ross Hutchings (Administrator)

    Richmond to ask voters to change business tax so it can reap more revenue

    Voters will choose whether to approve a new way to tax businesses

    By ANNIE SCIACCA | asciacca@bayareanewsgroup.com | Bay Area News Group

    PUBLISHED: August 5, 2020 at 8:57 p.m. | UPDATED: August 8, 2020 at 9:35 a.m.

    RICHMOND — Richmond will ask voters to approve changes to the way businesses are taxed in an effort to almost double the city’s take from them.

    The City Council on Wednesday voted to put a measure on the November ballot asking voters to authorize taxing businesses based on their gross receipts instead of the number of employees.

    Currently, businesses pay a flat annual license tax of  $234.10 plus $46.80 per employee up to 25 employees and $40.10 for each additional employee.

    That would change if voters in November approve the proposed tax structure, under which businesses would have to pay a percentage of their gross receipts earned in Richmond, with the amount depending on the nature of their business and at a rate assigned per industry.

    In the proposed model, most businesses would pay between 0.06% and 0.68%. Grocers, for example, would pay 0.06% if they make up to $1 million in sales for the year, 1% if they make between $1 million and $2.5 million, and tiered up to 2% if they make $50 million or more annually in the city.

    A few industries would exceed the typical rate structure, including firearms and ammunition, which would be taxed at a rate of 2.4%, and cannabis, which would continue to be taxed at a rate of 5%.

    The rate structure would bring in an estimated $6.2 million in total revenue — $3.2 more than through the current structure.

    Though city staff had recommended taxing residential rental gross receipts at a flat rate of 1%, with a 50% discount for rent control properties, Councilmember Melvin Willis proposed using Berkeley’s model of taxing rentals at rates of 1.081% for the first four units and 2.88% for additional units. He also proposed giving property owners with four or fewer units a chance to credit the fees to the rent board so they don’t have to pay twice.

    A majority of the council approved his motion, with Mayor Tom Butt and Vice Mayor Nat Bates voting no and Demnlus Johnson abstaining.

    Bates said he believes changing the tax structure will unfairly burden businesses, especially at a time when many are barely hanging on amid the coronavirus pandemic fallout.

    “You’re sticking it to the people who are already hurting and they’re going to hurt even more,” he said, noting that businesses like Amazon, which city staff and leaders worked hard to bring into town, could be driven out by the tax.

    The measure has drawn support from workers and union members, who say the change would stimulate job creation because additional employees wouldn’t become a tax burden.

    They say large businesses that make more money would be taxed more under the progressive tax structure.

    Money generated by the tax rate change could go toward the city’s funding of “Richmond youth, libraries, parks, community centers, emergency response, and other city services that may see cuts due to a structural budget deficit compounded by COVID-19 related revenue shortfalls,” a city memo says. Because the money is considered a general tax, however, it could be spent other ways too.

    The ballot measure would need a simple majority of votes to pass.

    Despite a Friday deadline for submitting the measure to qualify it for the November ballot, the city can make small changes to it later such as lowering the tax rates (but not raising them) in the future. Council members agreed to form a working group to bring in voices from the business community and others to discuss what the rates for specific industries should be.


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