FOR IMMEDIATE RELEASE: March 18, 2022
Contact: Tiffany Kang, [email protected]
Oakland Council Members Bas and Fife Introduce Fair Business Levy to Raise $40 Million to Improve City Services and Support Smaller Businesses
Proposed November Ballot Measure Moves Forward to Address Homelessness, Keep Streets Clean, Provide Financial Relief to 20,000 Small Businesses and Support Citywide COVID Economic Recovery
OAKLAND, Calif. – Today, Friday March 18, 2022, Council Chairman Nikki Fortunato Bas and Council Member Carroll Fife introduced legislation to advance a progressive and fair business tax proposal to modernize the regressive corporate tax structure of 20-year-old Oakland and raise $40 million to protect and expand vital city services to address homelessness, repair and clean up our streets, and provide tax relief and COVID recovery support to more of 20,000 struggling small businesses, many of which are owned by women and people of color.
The legislation will be heard at the Rules and Legislation Committee on March 31, 2022, with discussions and comments to inform next steps, toward a November 2022 ballot measure. The legislation updates the resolution passed at the unanimously on July 14, 2020 and incorporates the recommendations of the working group on fairness in corporate taxation.
Promoting fairness by addressing the disproportionate tax burden on Oakland’s smaller businesses
Unlike other Bay Area cities, Oakland’s current flat business tax forces small businesses to pay the same tax rate as large corporations earning tens of millions in gross receipts.
The status quo is highly inequitable, with smaller businesses in Oakland disproportionately bearing the tax burden. In fact, 93% of all businesses in Oakland earn less than $1 million in gross revenue per year. However, while their combined income is only 18% of citywide taxable gross receipts, together they paid double their share – 34% – of all business taxes in fiscal year 2019. -2020. This inequity is further demonstrated by the fact that the remaining 7% of businesses in Oakland – those earning more than $1 million in annual gross receipts – account for 82% of the city’s gross receipts, but pay far less than their share, only 66% of the total. business taxes.
Council members Lower and Fife’s graduated business tax proposal would increase fairness and equity by updating the tax to a graduated rate structure, where small businesses pay less tax, while larger businesses – in especially the larger multi-million dollar corporations – pay more. The proposal would not increase taxes paid by landlords and tenants.
Key features of the proposal include:
Tax relief for small businesses: More than 20,000 small businesses will benefit from a tax reduction. This includes all retailers, restaurants, grocers, wholesalers, commercial and personal service businesses, hotels, motels, and professional/semi-professional businesses with up to $2.5 million in gross receipts and all manufacturers with up to $1 million in gross receipts..
Progressive multi-level structure: As a business owner’s gross receipts increase, the rate they pay on that revenue increases. While 97% of businesses will receive a tax cut or pay similar rates to what they pay now, the wealthiest 3% of Oakland businesses will be asked to contribute more while maintaining the regional competitiveness of our city. The highest tax rates will apply only to companies with annual gross revenues of $100 million or more and to administrative headquarters of companies with total annual revenues exceeding $1 billion.
Stakeholder Engagement Task Force and Blue Ribbon
Oakland’s business tax update has been the subject of significant discussion and debate since 2020. The authors of the 2020 legislation (Board Members Bas, Thao, and Kalb) committed:
ethnic chambers of commerce, including African American, Chinese, Latin American and Vietnamese chambers;
Oakland business improvement districts and associations, local merchant associations and individual businesses;
business and entrepreneur coalitions such as the Oakland Indie Alliance, the Metropolitan Chamber of Commerce and the Jobs and Housing Coalition;
and the Refund Coalition, a coalition of labor and community organizations advocating for the City’s budget; as well as the Oakland Budget Advisory Committee.
In January 2021, the City Council established the Blue Ribbon Equitable Business Tax Task Force to engage in a thorough process of analysis and stakeholder engagement to develop comprehensive recommendations for a modernized and progressive business tax. . The 11-member task force met 16 times from April to October 2021 and held over 20 hours of public meetings and discussions.
“As thousands of Oaklanders struggle to make ends meet and our public services struggle to find resources and fill vacancies, our city’s wealthiest businesses continue to profit,” said Chairman of the Board Nikki Fortunato Bas. “Our proposal invites larger companies to make larger investments to help rebuild and strengthen our city. It will create a fairer tax structure, raising $40 million for homeless services and housing, street and sidewalk maintenance, garbage collection, small business assistance, fire safety and community safety.
“Residents and business owners all want to see better living conditions in Oakland,” said Carroll Fife, District 3 Council Member. “Calls for better municipal services are universal, regardless of race, class and income – but when it comes to fair fiscal responsibility, universality ends. The structure of taxation flat fee in place today is outdated and demands more of women, BIPOC and small business operators who bear the brunt of this financial inequity while big business avoids accountability to our community Local legislators have a responsibility to make it right, and that ordinance finally moves us in the right direction.
“Oakland’s small business and entrepreneurial community has overwhelmingly expressed a shared desire for more responsive and impactful city services, such as keeping our streets and sidewalks clean and well maintained, and our vulnerable neighbors housed and stable,” said declared Ari Takata Vasquez, executive director of the Oakland Indie Alliance and chairman of the Equitable Business Tax Task Force. “The small business community enthusiastically supports this business tax reform, which would lead us to a vibrant and prosperous city where every storefront and street provides a high-quality environment for workers, customers and residents. »