Gross receipts tax worries array of business owners

A proposed new tax designed to target The City’s largest businesses has smaller-business owners worried about its ramifications.

The proposed tax on big businesses “can’t be helpful to the small businesses because [big businesses] won’t be able to buy as much, and it will cut down on their activity in The City,” said Florence Alberts, who sits on The City’s Small Business Commission.

Alberts’ also said the big businesses will “move out of The City” to places where it’s cheaper to do business.

Alberts comments come days after Board of Supervisors President Aaron Peskin introduced a ballot measure that would enact a 0.1 percent tax on businesses pulling in more than $2 million year. A gross receipts tax is based on the total revenue a business generates prior to subtracting any costs. The tax is expected to impact 12 percent of The City’s 85,000 businesses. The tax would be in addition to the current payroll tax, which assesses a 1.5 percent tax on the total amount of money paid to employees if it is more than $167,000 a year.

The measure would also enact a 1.4 percent tax on commercial leases when the rent is more than $2 million.

The tax would generate about $55 million a year for The City’s operating budget, which faces a budget deficit of more than $115 million for the budget year beginning July 1, 2007. If approved by the Board of Supervisors, the tax measure would come before voters in November.

The City’s top businesses are making large profits without having to pay back into The City’s infrastructure, which they rely on, Peskin said. He added that a gross receipts tax would not drive out big businesses that choose San Francisco for its prime location.

Stephen Cornell, owner of Brownie’s Hardware, maintains the tax would affect his business, saying the exemption threshold is low enough to impact small businesses such as his.

“Any tax on a business in San Francisco is bad because there are enough hurdles for all businesses in The City with this incredible minimum wage,” said Mike Puente, owner of House of Bagels on Geary Street. The City’s minimum wage is $8.82, while the state’s is $6.75.

He also said that increasing taxes for the large businesses in The City would likely result in them “passing it along to the consumers.”

Mayor Gavin Newsom opposes the tax, saying it would cause businesses to look elsewhere.

“If the proposed rate were higher, I might have gotten concerned about its business impact, but the small marginal rate seems reasonable,” said business owner David Chiu, who also sits on the City’s Small Business Commission.

jsabatini@examiner.com

Bay Area NewsGovernment & PoliticsLocalPolitics

If you find our journalism valuable and relevant, please consider joining our Examiner membership program.
Find out more at www.sfexaminer.com/join/

Just Posted

Muni’s K-Ingleside trains will resume service after a long hiatus caused by the COVID-19 pandemic. (Kevin N. Hume/S.F. Examiner)
K-Ingleside train to return on May 15

Announcement comes on the heels of pressure from Supervisor Myrna Melgar

Demonstrators march from Mission High School towards the San Francisco Police station on Valencia Street. (Jordi Molina/ Special to the S.F. Examiner)
Vigil, march honors those killed by police

Deaths of Daunte Wright, Roger Allen and others prompt renewed calls for defunding

A Recology employee stands at the comapany’s recycling facility on Pier 96 in 2016. (Jessica Christian/2016 S.F. Examiner)
Nuru scandal: Feds charge second former Recology executive with bribery

A second former Recology executive is facing charges for allegedly bribing ex-Public… Continue reading

Kiana Williams
Stanford’s Kiana Williams drafted by WNBA champion Seattle Storm

Kiana Williams is going from one championship team to another. A senior… Continue reading

Talika Fletcher, sister of Roger Allen, is consoled at a vigil to honor her brother, who was killed by Daly City Police on April 7, on Wednesday, April 14, 2021. (Kevin N. Hume/S.F. Examiner)
Supporters march for SF man killed by Daly City police

Struggle over fake gun ends in shooting of 44-year-old Roger Allen, DA says

Most Read