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Tacoma: Council to consider dropping B&O tax threshold tonight

Post by Lewis Kamb / The News Tribune on Dec. 13, 2011 at 2:51 pm |
December 13, 2011 6:53 pm

A year after Tacoma’s City Council raised the city’s B&O tax threshold to help small businesses, council members will consider lowering it tonight as yet another way to help deal with a budget crisis.

Councilman David Boe said today he will walk a proposal onto tonight’s council agenda that calls to reduce the city’s Business and Occupation tax threshold to include only businesses with gross annual revenues of $150,000 or more.

The current threshold, which took effect Jan. 1,  is $250,000.  Last December, the Council voted to raise the threshold from $75,000,  so that small and micro-businesses would be exempt from paying the tax.

The measure will be introduced for first reading tonight, with a final vote expected on Dec. 20.

“I’m not happy about this,” said Boe, when explaining his idea at today’s study session. “…But this is another one (revenue generating idea) we should at least consider.”

Moving the threshold down to the $150,000 level is expected to impact more than 600 businesses in Tacoma and raise an additional $370,000 per year, Boe said. If approved, the new tax law would take effect Jan. 1, 2012.

While praising Boe for coming up with another idea, Councilman Marty Campbell warned the measure is yet another budget-spurred proposal that targets Tacoma’s small businesses.

“We keep going back to our small businesses to solve our budget crisis,” Campbell said.

When the council raised the B&O tax threshold last year — an idea staunchly supported by Mayor Marilyn Strickland – city staff estimated about 4,900 businesses would be exempted from the tax, costing the city about $1.4 million in annual revenues.

Boe’s measure is the latest revenuie-generating ideas to be considered by the council as a way to help close a projected $31 million budget gap for the city’s 2011-12 general fund budget.  The council also will consider tonight three other proposals that collectively would raise about $900 in revenues next year.  They include  increasing business license fees, raising false alarm fees and hiking fines for red light- and speed-camera tickets.

Several other revenue-generating ideas — implementing a city car tab fee; imposing an admission tax on tickets to some nonprofit events; instituting a 1/10th of one percent sales tax to partially subsidize some mental health and chemical dependency programs; and eliminating tax reductions long provided to health-care nonprofits — are still being researched and remain under council consideration.

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