Council May Revise Business License Fees

Medium-sized businesses and wholesale distributors may see a tax break when the city further revises its controversial business license fees. The City Council is scheduled to vote on the proposed changes tonight.

“We promised when we brought this forth a year ago that we would review it with the business community and make as many reductions as we could,” City Manager Bill Smith said.

The business tax, implemented in June, replaced a $50 flat fee with a tax based on gross receipts. It was designed to be more equitable, city officials said, because under the old system, large department stores were paying the same as small businesses.

However, the tax prompted a backlash from some business owners who said they were unfairly targeted. The city revised the taxes in July to correct an error that hit arcades and self-service laundries with unusually high charges.

Another problem that has concerned business owners was the lack of division between medium-sized businesses with sales between $500,000 and $1 million, city officials said.

“If someone was making $500,001, they were paying the same as someone who made $1 million,” Community Development Director Don Anderson said.

If adopted by the council, the revisions would create more brackets in the tax system.

In addition, the base fee would be lowered from 0.1% of gross receipts to 0.05%, Anderson said, and a limit of $2,500 for the city’s large businesses would be set.

Wholesale businesses, under the plan, would pay the tax based on the number of employees rather than gross receipts.

“We agreed that wholesalers fall in a special category,” Smith said. “They have high grosses but don’t require a lot of services.”