Foster City explores business tax hike

“We’d like to keep the small business within reason so they’re not really overly burdened with the high taxation on the business license. … If you take a look at our business license tax problem that we have now, we have some parameters that are limiting the ability for us to put that higher level on the gross receipts, so that is ... one of the things we will probably look closely at,” Mayor Patrick Sullivan said in reference to the roughly $28,000 tax cap for all firms.

Foster City generated about $1.7 million last fiscal year from the license tax, and it ranks in between cities like San Bruno and South City in terms of per capita BLT revenue generated. But unlike some other jurisdictions, such as Belmont, the city does not differentiate rates by business type, keeping a 75-cent tax on every $1,000 of gross receipts for all companies regardless of sector or size.

“Foster City currently has a single gross receipts rate and doesn’t divide across categories. When you group categories, what you are looking at is the method of business so that it makes sense to tax in a particular way and whether they’re contributing anywhere else in your tax structure,” said Robb Korinke, one of the consultants tasked with proposing new tax rate options.

It’s been over a decade since the last business license tax change, and coupled with the city’s goal of exploring additional revenue options, councilmembers have identified the license tax as a way to potentially unlock additional revenue that is more commensurate with the volume of company sales.

“It’ll be interesting to see how we handle different types of business. I do want to protect our small businesses who are struggling. Trying to make a dollar here is not easy. And then some of our larger businesses, I think, are not necessarily paying their fair share because of the lower cap that we have,” Vice Mayor Stacy Jimenez said.