Rent tax concerns businesses 

A proposed business tax that could land on the November ballot has local vendors and merchants fuming.

The Small Business Commission has received dozens of e-mails from businesses stating their opposition to a proposed ballot measure that would tax commercial rents. The commission is planning a special hearing at the end of the month to discuss the plan.

The proposal, which was introduced by Supervisor David Chiu, calls for reducing the 1.5 percent payroll tax for employees who earn less than $85,000 and offers payroll tax credits. It would also impose a new gross-receipts tax on commercial rents.

“My business tax reform legislation will encourage job growth by reducing the payroll tax and shifting to a commercial rent tax,” Chiu said.

The supervisor has said a tax on commercial rents “is better for the economy because it actually spreads the business tax across more taxpayers,” but businesses reject the notion that it will help stabilize the volatile market. On the contrary, it would drive companies out of town.

“If they make it harder for people to rent because of extra taxes regardless of the size of the space, it’s going to make it harder for people to move into commercial areas,” said Philippe Doherty, senior area account manager for Complete Building Services. “The city of San Francisco needs to try to help all these commercial spaces that are left empty.”

If the measure does make it onto the November ballot, the mayor will work to defeat it, Newsom spokesman Tony Winnicker said.

“Supervisor Chiu’s proposal is not ready for prime time,” Winnicker said. “It’s a $35 million tax increase on thousands of businesses and nonprofits.”

The legislation needs six votes by the Board of Supervisors to qualify for the November ballot.

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