South City puts finishing touches on business tax measure

Currently, South San Francisco uses about four taxation methodologies dependent on the type of business, ranging from a per employee to gross receipts and per-unit model, with the employee model most prevalent.

The new model would retain a mostly per-employee format, but would simplify general business categories into just a few main groups, depending on their sizes. Small businesses, defined as up to nine employees, would have a $30 per employee rate, $45 per employee for medium-sized companies — up to 99 employees — and $55 for those with 100 or more workers. Hotels and short-term rentals would mostly retain a per-unit structure, and construction contractors would be taxed based on project valuation.

But unlike several other cities looking to update their BLTs as of late, such as Foster City and Redwood City, South San Francisco ultimately decided not to implement a tax cap for large businesses.

“The problem I have fundamentally with a cap is that if you go above that employee count, you are paying a lower effective rate than you should be, so the brunt of that tax will be placed on our medium-sized and on our small businesses, and that is just not fair,” Mayor James Coleman said. “If you have more employees, you should pay the same rate as any other business in South San Francisco.”

However, based on proposed ballot language, a future council could vote to implement a cap without requiring voter approval. Councilmembers also decided not to offer a phase-in approach for the large firms, which will see some of the steepest increases.

“These are not big numbers, and this is not going to solve our deficit problem,” Councilmember Mark Addiego said of a potential ramp-up for large companies. “It is not going to cause anybody to pick up and move out of town or anybody to not locate here because we charge a little bit more.”

Feedback from public commenters varied, with some, including Aracely Campa, spokesperson for California Life Sciences, saying that some of the initial tax proposals could “lead to stagnation and a hindrance to the innovation for which the city is known.” Others, such as Leslie Fong, said it was important for the large businesses, including the biotechnology industry, to pay their fair share to bolster city services.

“They should pay their share and pay for what they’re supposed to. We have given them the privilege to be here ... whatever they give back to us, they’ll put into the community, which we serve,” Fong said.

The council will finalize the measure in August, which will then go before voters this November.

alyse@smdailyjournal.com

(650) 344-5200 ext. 102