CYPRESS : City Sets Limits on Business License Tax
To encourage enterprises to grow and thus produce more revenue, the City Council has put lids on its business license tax.
By unanimous vote July 25, the council accepted a staff recommendation to charge a retail business no more than $26,000 a year if the firm produces more than $750,000 in annual sales tax to the city.
The council’s action also limited to $16,000 the business license tax on wholesale sales or manufacturers that produce more than $750,000 in annual sales tax.
Previously, there was no cap on the license tax, which is levied on a graduated-increasing scale.
The city levies its license tax on all businesses and trades to defray costs of city services.
But the staff memo to the council noted that some businesses and manufacturers greatly add to the city treasury by producing large amounts of sales tax.
Part of the statewide sales tax goes back to the cities where taxes were collected.
A cap on the license tax and other “incentives within the tax structure” would encourage businesses “to produce other tax revenue,” the staff memo said.
The council agreed, and with no negative comments, council members voted for an ordinance changing the city’s business license law.
The council’s action also directed an additional business license reduction for firms whenever they produce more than $1 million in sales tax.