OAKLAND — Residents will decide in November whether to overhaul the way the city’s businesses are taxed.
The City Council this week decided to place a measure on the ballot that would require businesses making a lot of money to pay higher taxes and others to pay less.
If passed, the measure would scrap the current tax structure that imposes a flat rate on all businesses’ gross receipts and enact a progressive, tiered rate that increases as a company’s gross receipts grow.
City leaders describe the proposal as a compromise between one presented earlier this year by Council President Nikki Fortunato Bas and Councilmember Carroll Fife and the pushback from businesses that said they need some tax relief because of the pandemic.
The council members’ original proposal would have generated $40 million extra per year for the city, but the Oakland Metropolitan Chamber of Commerce called that too drastic.
Earlier this week, city leaders, union groups and the business chamber announced they had drafted a measure they could all get behind this election. It’s estimated to generate $22 million annually for the city’s general fund, which proponents say could be used toward services such as reducing homelessness and cleaning up city streets.
Under the current tax structure, a business that makes $10 million a year is taxed at the same rate as a business that pulls in only $100,000, although rates vary by industry.
Under the proposed ballot measure, the higher the revenue the higher the rates based on gross receipts, though they’ll still vary by industry.
About 6,000 businesses — including groceries, shops and restaurants — would catch a tax break under the new plan. But some of the highest-grossing businesses in Oakland — mostly those with administrative headquarters with more than $20 million in annual revenue — would pay up to four times more than they do now.
If a majority of voters approve the measure, it’ll take effect Jan. 1, 2023.
