Rise in Business Fees Proposed in Santa Monica : Taxes: License fees for professionals could double under a plan that is drawing protest from the Chamber of Commerce.

Proposed changes in Santa Monica’s business license taxes could double the fees for professionals, such as architects and doctors, and would remove the $5,000 maximum fee for auto dealers.

The city’s business community is expected to challenge the proposal.

The City Council on Tuesday directed the city attorney to draft an ordinance with the proposed changes, which would increase annual revenue by $3.2 million. The city now takes in $6.8 million from business license taxes. The item was originally scheduled to come back before the council April 10, but business representatives persuaded the council to delay the matter until April 24 to give them more time to study the proposal.

Finance Director Mike Dennis said the proposed increases are based on a consultant’s recommendations, to bring the city’s fees in line with those of nearby cities and to distribute the tax burden more equitably among businesses. Dennis said the tax schedule has not been comprehensively reviewed since 1962, although some revisions were made in 1983 and 1984 for major business categories.

Attorney Chris Harding, speaking for the Santa Monica Area Chamber of Commerce, said in an interview outside the council meeting that the proposed fees are too high.

“The city compares itself with whatever city has the higher taxes,” Hardy said. “They want to charge us the rates of the higher cities without providing the same quality of services as the higher cities.”

Harding said the city has not adequately justified the proposed increases. He said that during the next 30 days business leaders hope to persuade city officials to lower the proposed fees or to phase them in gradually.

Professionals such as doctors and architects now pay a base fee of $50 plus $1 for every $1,000 in gross receipts from $50,000 to $100,000, and $3 for every $1,000 in gross receipts over $100,000. The new proposal calls for a base fee of $75 plus $5 for every $1,000 in gross receipts over $60,000.

That would mean, for example, that an architect grossing $100,000 would pay $275 a year instead of $100, a 175% increase. If the architect grossed $500,000 a year, the tax increase would be 75%, with fees jumping from $1,300 to $2,275.

Auto dealers would no longer have their maximum fee set at $5,000, and although their base fee would drop from $100 to $75, the progressive rate would change. Formerly set at $1.25 for each $1,000 in annual gross receipts up to $80,000, the rate would become $1.25 for each $1,000 over $60,000 in gross receipts.

According to city estimates, that would mean an increase in taxes for only those businesses grossing more than $1 million a year. For a business that grosses $5 million, for example, the fee would increase from $5,000 to $6,250, a 24% increase. However, for an auto dealer grossing $10 million, the increase would jump from $5,000 to $12,500, a 150% increase.