Richmond voters will be asked in November whether to change the way the city assesses business taxes, with the City Council’s move to put a measure on the Nov. 3 ballot proposing a switch from a payroll tax system to one based on businesses’ gross receipts.
If voters approve that measure, businesses would be taxed not on the number of employees they have, but on gross revenues, ranging from 0.075 percent to 1.395 percent of gross receipts. The measure includes an exemption for small businesses with gross receipts under $250,000.
It is estimated the measure would generate an estimated $4.9 million annually in additional revenue.
Small businesses and owners of small clusters of rental units would stand to pay less, city officials said, while larger businesses would pay more, sometimes much more. If voters approve the measure, it would take effect in July 2021.
“The addition of another financial burden would be too much for many (businesses) to handle.”
Lisa Johnson, Richmond resident
At the Aug. 5 City Council meeting, several public commenters said they favor a more progressive tax approach to benefit small businesses and renters.
“For too long, homeowners have been subsidizing business in Richmond,” Gabriel Holland told the council. “This is a good solution to a longstanding problem in Richmond.”
Many others said higher taxes would be crippling as they would be recovering from (or still in) the effects of the COVID-19 pandemic.
“The addition of another financial burden would be too much for many (businesses) to handle,” Richmond resident Lisa Johnson said.
Some other commenters sought a middling approach, perhaps phased in over a longer period of time, or with a cap on the maximum tax to be paid. Tom Welsh said his Richmond employer would have a 3,000 percent increase in business taxes under the proposed gross receipts plan; he would support a tax cap.
In the end, the council approved a measure with tax rates similar to Berkeley’s, which they view as progressive.
Mayor Tom Butt and Vice Mayor Nat Bates opposed the measure as being too unfriendly to larger businesses. Butt, acknowledging the city needs the money, suggested simply doubling the existing payroll tax would be supported by the business community.
But Councilman Eduardo Martinez countered, saying, “What I hear when businesses say they don’t mind a 100 percent (tax) increase, maybe they’re paying way too little.”
Martinez and fellow council members Ben Choi, Melvin Willis and Jael Myrick voted yes on the ballot measure; Butt and Bates voted no, and Demnlus Johnson abstained, without explanation.