Two separate ballot measures to reform San Francisco’s business tax policies were introduced at the city’s Board of Supervisors meeting Tuesday.
Both proposals, one put forward by Mayor Ed Lee and board president David Chiu and the other by Supervisor John Avalos, seek to eliminate the city’s 1.5 percent payroll tax and replace it with a gross receipts tax that would tax the annual revenue of a business.
The board would need a majority vote to put one or both measures on the November ballot.
The payroll tax is something “the business community has had significant issues with for many, many years,” Chiu said, noting that San Francisco is the only city in the state with that type of tax, which charges companies for adding new employees.
The new tax would be phased in over a five-year period as the payroll tax is phased out, and would exempt companies making less than $1 million in revenue.
“It’s a very fair way to ask the business community to help us with city services,” Chiu said.
Avalos said his measure was similar to the other one but would levy higher taxes on corporations making more than $25 million annually.
He said his proposal would “make sure our largest corporations pay their fair share.”
Both Chiu and Avalos agreed that it would be best if a compromise is reached and only one proposal went to the voters, a sentiment shared by the mayor, according to his spokeswoman, Christine Falvey.
“There should be one measure so it’s not confusing to voters,” Falvey said.
She said Lee has done “a lot of outreach to the people affected” by the tax and the mayor and Chiu’s proposal “reflects that work.”
San Francisco used a hybrid tax system in the 1970s and 80s that allowed companies to pay whichever was the higher number between its gross receipts or payroll tax.
However, the gross receipts tax was eliminated in the 1990s after a similar system in Los Angeles was ruled unconstitutional in court, according to city officials.
Dan McMenamin, Bay City News