WESTMINSTER : Business License Tax to Be Raised

Business owners in the city will now pay license taxes based on gross receipts rather than a flat rate, the City Council has decided.

The council voted unanimously Tuesday to eliminate the city’s annual tax of $50 a year and replace it with a tax of 0.1% of gross sales, or a minimum of $100 a year.

The city is facing a $1.9-million deficit for the next fiscal year, officials said, and the increase in license taxes is expected to bring in an extra $500,000 a year. The new rates will take effect immediately, officials said.

The new tax is more equitable, City Manager Bill Smith said, because currently, “the mom-and-pop stores pay $50 a year, and Robinsons also pays $50 a year.”

Under the new system, businesses with less than $100,000 a year in revenue--about 40% of city enterprises--will still pay $50 plus $15 to renew permits next year. But those businesses’ taxes will increase to $75 for the 1996-97 fiscal year and to $100 the following fiscal year, officials said.

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

“The high-end folks are concerned about it, auto dealers most certainly,” Frank Zellner, Greater Westminster Chamber of Commerce director, said. “But we understand the city needs revenue to maintain its services and that’s important too. If we can’t maintain them, then business owners are compromised in other ways.”

In addition, Zellner noted, the Westminster tax was low in comparison to those of surrounding cities. The average business license tax in Orange County is $123, and Westminster was the only city other than Irvine that had a flat rate.

The Vietnamese Chamber of Commerce had previously opposed the tax, but has changed its position, president Co Pham said.

“We have had some differences with the city, but we agree that the city needs [the tax],” Pham said.