Anaheim : Business License Tax Review Sparks Debate

A proposed review of the city’s business license tax has come under fire from two City Council members, who criticized it as a way to raise the tax, which has remained unchanged for 27 years.

Speaking against the review, Mayor Don Roth said, “The handwriting is on the wall that you’re going to raise taxes.”

Council member Ben Bay also opposed a review of the business tax, and said the study’s intent is “obvious . . . another means of coming to an end to increase fees and taxes.”

Council members are scheduled to decide on the proposed study Tuesday.

The business license tax affects about 7,300 contractors, retailers, wholesalers and others, such as landlords, said Ron Rothschild, the city’s program development and audit manager.

The taxes are in some cases costing the city more to collect than they bring in, Rothschild said. Owners of small apartment houses with about 10 units, for example, pay 50 cents a unit, or $5 a year, Rothschild said. The business license for such a complex is about $9, he said.

“Obviously, in a 27-year period, the marketplace changes,” Rothschild said. He said officials want to know how the city’s tax compares with others, and the review would show that.

The study, to be done by Ralph Andersen and Associates, would review current tax structures that in many cases are regressive, Rothschild said.

The review would cost the city an initial $20,000 for an overview assessment of the current tax, another $39 to $99 an hour if it goes into a second phase, or meetings with staff and others to review the results of the assessment, and $30,000 for a third phase of preparing a proposal for revising the business license tax.

Council members agreed last week to postpone voting on whether to have the study until they review another report, issued by city staff members in 1976. That study, which recommended revisions of the tax structure, including both increases and decreases, was rejected by the former city council, Rothschild said.