WESTMINSTER : New Business Tax Plan Gets Preliminary OK

A proposal to base the city’s business license tax on gross sales has won preliminary approval from the City Council.

The council voted 4 to 1 Tuesday to scrap the annual flat tax of $50 and replace it with one based on 0.1% of annual gross sales or a minimum tax of $100 a year.

“This is a key part of our budget balancing effort for 1995-96,” said City Manager Bill Smith, adding that the city is facing a $1.9-million shortfall for the next fiscal year. Smith said the city hopes to bring in an extra $500,000 a year under the new formula, which the council will consider for final approval May 9. If approved, it would take effect in June.

A business license tax based on gross sales would be more equitable, officials said, because under the current system, small-business owners pay the same amount as large enterprises.

Westminster is the only Orange County city other than Irvine that has a flat business tax rate, officials said. The average business license tax in Orange County is $123.

Enterprises with gross annual sales below $100,000 would still pay $50 for a license next year and $15 to renew it once. The tax would rise to $75 in 1996-97 and $100 in 1997-98.

Larger companies would pay a maximum of $2,500 for the current fiscal year, increasing $250 a year to a maximum of $3,500 by fiscal 1999-2000. Utility companies, which in the past were exempt, would be required to pay.

Councilwoman Margie L. Rice, who cast the lone opposing vote, said utilities would pass on the added costs to the customers, making the measure in effect a utility tax.

The Vietnamese Chamber of Commerce has also opposed the proposal, saying that requiring companies to report their gross sales would violate their privacy.