The city will be collecting hundreds of thousands of dollars to soothe Burlingames growing financial wounds after deciding Tuesday to enforce a $100 tax to which some business people had taken exception to.
The tax affects each businessperson who makes at least one sale in Burlingame during a year, even if that person’s office is elsewhere. The tax has been a law for decades but many businesses haven’t been paying.
Realtors had spoken out against the tax, saying they would be taxed unfairly. Brokers file independent-contractor tax forms, so the city considers them separate business entities and thus subject to the tax. Brokers argued, however, that they are employees of their respective real estate offices and should not be taxed as whole businesses.
The city’s fiscal woes ultimately made the difference, however. With the council split 2-2 and Vice Mayor Ann Keighran absent on Feb. 5, the city moved the vote to Tuesday.
Keighran, Mayor Rosalie O’Mahony and Councilmember Terry Nagel endorsed the tax, citing $202 million worth of capital needs. Councilmember Jerry Deal had initially voiced opposition to the tax but said Tuesday that the city’s financial problems were too vast to ignore.
Officials expect the amount the tax annually contributes tothe city’s general budget to possibly double with added enforcement.
Councilwoman Cathy Baylock voted to deny the enforcement Tuesday. “Things have changed in 30 years,” she said, referring to the time since the tax was introduced.
The “numerous” businesses that had not been paying for the tax will not only have to dish out the $100 annual fee but up to $300 in back payments, Finance Director Jesus Nava said. Businesses can satisfy the tax requirements by paying $100 and a one-time $35 application fee in March. Beginning April 1, the fees for delinquent businesses steadily increase to a maximum of three years of back pay due, bringing the maximum tax due to $435.
As part of the vote, the city hired Municipal Auditing Services firm to perform an audit of all businesses not paying the tax.
By the numbers
The City Council voted Tuesday to enforce a yearly business tax.
$480,000 Current city revenue from licensed businesses
$100 Annual tax for anyone doing business in the city
$35 One-time registration fee
3 Maximum years of back-pay that can be enforced on businesses
30 Days in amnesty period when businesses could avoid back payments
March 1 Date businesses would have to start paying
3,127 Licensed business in Burlingame
1,700 Licensed businesses not in Burlingame subject to tax
Source: Burlingame Finance Department