Laserfiche WebLink
File Number: 13-378 <br />CHALLENGES OF THE PROPOSAL <br />Although the proposed Business License Tax Holiday will reduce financial costs for new <br />businesses and send a clear message that San Leandro is business friendly, it is not <br />guaranteed to spur new business activity. For most businesses the annual San Leandro <br />business license tax is a flat fee of $117.00 plus a per-employee charge ranging from <br />$35-$87, depending on the business type. These amounts compare favorably to most other <br />cities in the region. At these rates, the tax does not represent a significant operating expense <br />for most businesses. Staff is not aware of any businesses that have cited the Business <br />License Tax as a factor that caused them to locate outside of San Leandro . <br />The Business License Tax Holiday might also be seen as unfair by businesses that were not <br />offered a similar benefit when they began operations in San Leandro , particularly those that <br />opened just prior to the initiation of the program. <br />FINANCIAL IMPACT <br />The loss of General Fund revenue from a Business License Tax Holiday would depend on the <br />number of new businesses opening or moving to San Leandro during the program’s <br />timeframe. Based on data from 2011 and 2012, it is estimated that a 12-month holiday could <br />result in a loss of between $60,000 and $100,000 in Business License Tax revenue . In 2011, <br />approximately 420 new businesses opened in San Leandro, employing approximately 1150 <br />people. In 2012 approximately 340 new businesses opened in San Leandro, employing <br />approximately 850 people. <br />Over time, the program could also increase General Fund revenues in other areas by leading <br />to increases in property and sales taxes. The amount of these increases is very difficult to <br />estimate and will be a factor of the number of new businesses that would not have located in <br />San Leandro absent the Business License Tax Holiday . <br />MEASUREMENT OF SUCCESS <br />If enacted, staff would track the number of businesses that benefitted from the Business <br />License Tax Holiday. This data would be compared against other recent years to determine <br />whether or not the Program spurred new business activity. Although it is difficult to control for <br />larger changes in the regional economy, it would be possible to generate rough estimates of <br />the program’s impacts . Measurable data would include number of new businesses and <br />number of employees at those businesses. It may also be possible to generate rough <br />estimates of sales tax generated by benefitting businesses. <br />PROGRAM PARAMETERS <br />Staff recommends the following program parameters for the Business License Tax Holiday : <br />Program Dates: One year, from September 1, 2013 - August 31, 2014 (or as soon as can be <br />implemented). <br />Eligible Businesses: All businesses that are new to San Leandro and physically located <br />Page 3 City of San Leandro Printed on 7/10/2013