Competing real estate transfer tax proposals were placed on the November ballot Tuesday, but both are being used as leverage around a plan to change how San Francisco taxes businesses.
Mayor Ed Lee proposed a real estate transfer tax increase of .2 percent on property sales in excess of $1 million, which would raise $13 million annually for a city trust fund for affordable housing. But Lee says he is willing to withdraw this tax measure if there is a consensus on his proposal to replace the payroll tax with a gross receipts tax.
The real estate industry has not been supportive of the gross receipts measure — which Lee introduced last week — since its tax bills would likely increase significantly. But Lee is banking on that industry accepting the proposal in exchange for his withdrawal of the real estate transfer tax.
“Once we achieve a consensus business tax reform measure for November, I intend to remove this real estate transfer tax from the ballot,” Lee said in a letter as part of the measure’s submission.
Lee’s gross receipts tax proposal would generate the same amount as The City’s current 1.5 percent payroll tax, but would also increase business license fees to generate an additional $13 million.
And as if that debate weren’t complex enough, Supervisor John Avalos placed another real estate transfer tax on the ballot Tuesday, with the backing of supervisors David Campos, Jane Kim and Eric Mar. His measure would generate $16 million by increasing the transfer tax by .5 percent on properties sold for more than $2.5 million.
Tuesday was the deadline for measures to be placed on the November ballot with the signature of the mayor or four supervisors.
Avalos also has introduced a competing gross receipts tax measure that would generate $40 million more than Lee’s proposal. The board’s more left-leaning members support increasing taxes to help fund core services for The City’s neediest, while Lee wants to keep his proposal revenue-neutral.
Campos said The City needs to inject more revenue into its budget after years of cuts have put the safety net in jeopardy. “In this city, we care about everyone and we want to have a safety net that protects the well-being of every individual,” Campos said. “I think that anything substantially lower than the $40 million mark that has been proposed would not be appropriate.”
The Board of Supervisors will debate the proposals next month.