Committee Proposes Smaller Business Tax Hike for National City
A committee of National City business leaders tasked with crafting an alternative to a failed city business tax hike voted on Tuesday to sharply reduce the size of the potential increase, lowering the amount of annual revenue the city would generate by raising its business tax rate.
The committee of 12 business leaders voted unanimously to forward to the City Council an alternative tax increase proposal that would raise $2.75 million annually in additional revenue instead of the initially sought $7.5 million. The proposal still requires approval by both the City Council and city voters.
The city’s original tax proposal grouped city businesses into different categories and imposed different annual business license tax rates on each category. The alternative proposal approved by business leaders on Tuesday scraps that plan and replaces it with a flat 0.07 percent annual business license tax on all businesses’ total sales. The proposal caps each business’ total annual business tax bill at $30,000, effectively shielding annual revenue above $42.9 million from the tax.
Committee members said the smaller amount generated by their proposal still would help the city because it would add to city coffers while also ensuring that National City remains an attractive place to do business.
“This enables [the city] to elevate their revenue while making National City more competitive,” said committee member Jenifer Ball, vice president of Ball Auto Group, one of the city’s largest car dealers. “We are ready to help the city. But we don’t believe it’s the businesses job to help them close their [entire] deficit.”
Earlier this year, on Aug. 5, a divided City Council rejected the proposed $7.5 million business license tax increase in the face of stiff opposition from the city’s Chamber of Commerce and a cross section of local businesses. Business leaders said the proposed increase was too big, poorly crafted and would disproportionately impact small businesses.
The committee, which included Ball, National City Chamber of Commerce President Karen McManus, and Patti Finnegan, owner of locally beloved Niederfrank’s Ice Creams, met regularly with City Manager Doug Schulze and Economic Development Director Pedro Garcia to craft an alternative tax proposal.
Schulze and Garcia on Tuesday proposed another alternative that would have raised an additional $5.8 million in annual business tax revenue. Business leaders said they did not support that large of an increase and voted for their own proposal instead. They aim to bring their proposal to the City Council for a possible vote on November 17.
Told of the business leaders’ proposal, city councilmembers had divergent reactions.
City Councilmember Marcus Bush, who is running for mayor and initially proposed giving business leaders the opportunity to weigh in on the tax increase, called the alternative proposal “a huge step forward.” “How we put [the original tax proposal] on the ballot, it would have failed, and we would have had a bad relationship with the business community,” Bush said. The alternative proposal marks a significant step toward reaching a compromise, he added.
Councilmember Jose Rodriguez, who also is running for mayor, disagreed. “Unfortunately, it’s what many thought this committee would produce,” Rodriguez said of the alternative proposal.