Tying increased business registration fees to the Consumer Price Index could be the path toward compromise for a single November ballot measure designed to replace San Francisco’s tax on businesses’ payrolls with a tax on gross receipts.
The Budget and Finance Committee of the Board of Supervisors on Wednesday sent dueling gross-receipts tax measures to the full board for a vote next week.
Mayor Ed Lee and board President David Chiu’s proposal includes a revenue-neutral gross-receipts tax and a $13 million-a-year business fee increase, while a competing proposal from Supervisor John Avalos would generate
$40 million in business-fee increases. The sticking point is the amount of revenue they would generate. Avalos’ proposal is supported by supervisors Jane Kim, Christina Olague, David Campos and Eric Mar.
Both sides of the debate hope the full board will agree upon a single measure Tuesday. The deadline for the board to vote to place a tax measure on the ballot is July 31.
“CPI is something we do with most of our fees,” said Lee’s senior adviser Tony Winnicker. “It’s a reasonable part of discussion around a consensus measure. We have wide business support around the rates. And now we’re working to find consensus on the new revenue.”
Registration fees are currently at $25 to $500. Lee’s proposal increases them between a range of $75 and $20,000, while Avalos’ proposal increases them between $50 and $100,000. Both measures — taxes on business gross receipts with rates tailored by industry — would generate as much annually as the payroll tax, about $410 million. Businesses with less than $1 million of gross receipts would not pay a gross receipts tax.
Gabriel Holland, political coordinator for SEIU Local 1021, is among those advocating for Avalos’ proposal.
“We are willing to look at some kind of compromise as long as there is sufficient revenue coming into the general fund and as long as there is an escalator for more,” Holland said. “We are willing to a little bit move off that number as long as there is an escalator.”
Chiu called for a consensus tax measure during the committee meeting and warned that the reform effort could unravel without a compromise.
“We are closer than ever to coming together on a consensus proposal that I think of as a once-in-a-decade type proposal to really hopefully both create jobs and generate revenues that our city needs,” Chiu said.
Winnicker said the Mayor’s Office continues to be optimistic that it will secure wide support for a single measure to reform business taxes.