Business tax break plan makes little headway 

Mayor Gavin Newsom’s proposed one-time tax break for small businesses was shot down Wednesday.

Newsom has engaged in a political battle with members of the Board of Supervisors about his proposed tax breaks for businesses that he said would stimulate the local economy and help struggling businesses.

But during Wednesday’s Board of Supervisors Budget and Finance Committee meeting, even Newsom’s ally on the board agreed the proposals were not ready for approval.

The committee unanimously rejected Newsom’s plan to provide businesses with a one-time $2,000 payroll tax break for businesses with 20 to 49 employees who prove they are complying with The City’s employee health mandate. The committee had voted to table the legislation, effectively killing it, but then rescinded its vote later as a “courtesy,” and voted to continue it at the discretion of the committee chair.

The committee did keep in play another Newsom proposal to offer businesses a payroll tax exemption on new hires. It voted to continue it to allow for possible debate on a recrafted proposal.

The health mandate proposal was said to be a tax break for small businesses and an effort to incentivize compliance with the mandate. These businesses are required to pay $1.39 per hour per employee on health care for workers.

The cost of complying with this measure ranges from $30,000 to $70,000 annually.

The proposal would have cost The City up to $4.4 million, which includes about $3.7 million in a loss of payroll tax revenue and about $600,000 to hire five employees to ensure businesses are in compliance with the mandate.

Jennifer Matz, deputy director of the Mayor’s Office of Economic and Workforce Development, said the tax break proposal was “a very straightforward proposal.”

“There’s no more baking to do,” Matz said. “You may agree or disagree with the policy behind it.”

But Newsom’s ally on the committee, Supervisors Sean Elsbernd, said the proposal “wasn’t ready yet.”

“Even the Chamber of Commerce said what I would have said,” Elsbernd said. “It’s not ready because it’s just the carrot part. It needs both the carrot and the stick.”

The proposal did draw support from the Small Business Commission. Janet Clyde, vice chair of the commission, supported the proposal and advocated having the tax break in place for three years.

“Right now, small businesses are struggling to keep their employees employed,” she said.

jsabatini@sfexaminer.com

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