A little less than a year after a similar proposal was withdrawn under political pressure, Supervisor David Chiu announced plans Tuesday to fix what he called San Francisco’s “broken business tax system”: introduce a gross receipts tax that would partially — or entirely — replace the city’s payroll tax.
For the tax-challenged among us, a gross receipts tax is a tax levied on a business based on total sales. For example, if San Francisco were to levy a 5 percent business tax, a kombucha company would fork over $5 for every $100 in sales.
Why do this? Simple. “San Francisco is the only city in California to rely entirely on a payroll tax for its business tax,” Chiu said Tuesday. “The payroll tax is a job killer. It excludes some of our largest and most profitable institutions, like banks and financial service providers.”
San Francisco once had a gross receipts tax; it was eliminated in 2001 after the city’s businesses sued, at a cost to the city estimated at that time of $25 million annually. But that was when the city had a $5.2 billion budget; suffice to say things are changing.
Ergo: a return to a tax on the wealthiest among us? Do tell us more. Chiu would love to, and he will as soon as the City Attorney is done drafting the legislation, which could be sometime in February.
Like all tax measures, this one will have to go to the ballot. Chiu isn’t yet sure which ballot — June or November — he plans to send it to, but either one is guaranteed to produce some opposition in the business community. Because no one ever got rich paying taxes, right?