Mayor Gavin Newsom closed a deficit without tax hikes, but that didn’t stop other elected officials from proposing tax measures for the November ballot.
On Tuesday, Board of Supervisors President David Chiu introduced a ballot measure that would change how San Francisco taxes businesses and generate more than $30 million in revenue. Other tax measures introduced included an increase on the tax paid when a property is sold and a 10 percent parking tax increase.
“The mayor’s budget unfortunately avoids tough choices. It kicks them down the road,” Chiu said Tuesday. “It does not address the long-term fiscal crisis that we are in. We have to consider more-stable revenue sources.”
The tax proposals were blasted by Newsom spokesman Tony Winnicker.
“There is no revenue more uncertain than a November tax increase on residents and small businesses,” Winnicker said. “They want to strangle the life of our newborn economic recovery by putting all these tax measures on the ballot.”
Chiu said his proposal “moves us away from the current payroll tax that we now have that is killing jobs in San Francisco.”
It would reduce the 1.5 percent payroll tax for employees who earn less than $85,000 and offer payroll tax credits. To not only make up for the loss in revenue but also increase it, the measure would impose a new gross-receipts tax on commercial rents. A tax on commercial rents “is better for the economy because it actually spreads the business tax across more taxpayers,” Chiu said.
A number of businesses, like banks or insurance companies, do not pay business taxes, but they would start if landlords start passing the new tax onto their tenants.
“This proposal would create more jobs in the long run,” Chiu said.
In San Francisco there are about 80,000 businesses, all of which pay an annual license fee of $25 to $500. About 6,000 are required to pay the 1.5 percent payroll tax. This fiscal year, payroll taxes, along with the business registration fee, will add $346 million to city coffers.
It would take six votes by the board to place a tax measure on the November ballot.
Banking on voter approval
Tax measures introduced Tuesday for the November ballot:
Revise payroll tax, imposes gross-receipts tax on commercial property rents
- Provide payroll tax credit, increasing annually in amount
- Lowers payroll tax rate for employees earning less than $85,000
- Imposes a gross-receipts tax on new commercial rent
- Gross-receipts tax increase to 1.896 percent after three years
Introduced by Board of Supervisors President David Chiu
Increase real estate property transfer tax
- Among rate changes: for property value of more than $1.25 million but less than $5 million, a tax rate of $8.75 for every $500; and $10 for property valued in excess of $5 million
Introduced by Supervisor John Avalos
Parking tax increase and tax on valet services
- Increase parking tax from 25 to 35 percent
- Impose 35 percent tax on valet services
Introduced by Supervisor Ross Mirkarimi