Measure C - City of Oakland
Shall the measure amending Oakland's Business Tax Ordinance to provide one-year business tax exemptions for (1) certain small business with annual gross receipts of $1,000,000 or less, including retail sales, grocers, business and personal services, recreation and entertainment, and manufacturing, and (2) businesses that establish a new commercial location in the City; and authorizing the City Council to extend the exemptions on an annual basis for up to three additional years, be adopted?Yes Votes Needed to Pass: 50% +1 (majority) of the total votes cast on the measure by eligible voters★★★ IMPORTANT ★★★EXPAND this compressed “About This Race” window (by clicking "Read More") for valuable information. Don't miss it!MEASURE C ESSENTIALS ☆Placed on the Ballot By: Oakland City CouncilMeasure Type: Amendment of Business Tax Ordinance"Yes" Votes Needed to Pass: 50% + 1 of the total votes cast on the measure by eligible voters.☆ QUESTION ON THE BALLOT ☆Shall the measure amending Oakland’s Business Tax Ordinance to provide one-year business tax exemptions for (1) certain small businesses with annual gross receipts of $1,000,000 or less, including retail sales, grocers, business and personal services, recreation and entertainment, and manufacturing, and (2) businesses that establish a new commercial location in the City; and authorizing the City Council to extend the exemptions on an annual basis for up to three additional years, be adopted? ☆ WHAT YOUR "YES" OR "NO" VOTE MEANS ☆A “YES” vote is a vote to approve the proposed ordinance amendment.A “NO” vote is a vote not to approve the proposed ordinance amendment.……………………………………………………………….................................★ LEAGUE OF WOMEN VOTERS ANALYSIS (PROS & CONS) ★Source: The League of Women Voters of Oakland.Other formats: PDF, Video.☆ THE SITUATION ☆· In 2022 Oakland revised its business tax code to establish a progressive tax structure which taxes businesses according to the category of business and gross receipts.· Almost 90% of businesses in Oakland have gross receipts of less than one million dollars and 90% of businesses employ fewer than nine employees.· The City is interested in supporting existing businesses, particularly small businesses that contribute to the vitality of city streets and neighborhoods. Oakland also desires to provide incentives for new businesses to locate in Oakland.· In 2021 San Francisco established an analogous program to provide temporary relief from registration, permitting and other fees to certain categories of business. San Francisco extended that program in 2024 to businesses making under five million in gross receipts and recently offered tax credits to new and relocating businesses in specific zip codes.☆ THE PROPOSAL ☆· The measure would amend Oakland’s business tax laws to provide temporary business tax exemptions for two categories of businesses.The first exemption would apply to small businesses in retail sales, groceries, business and personal services, recreation and entertainment and manufacturing. Businesses in these categories that have annual gross receipts of one million dollars or less would be eligible for a one year business tax exemption for 2027. Estimates are that individual businesses would receive between $60 to $4,100 dollars in tax relief depending upon their gross receipts.· The second exemption would apply to persons that establish new business locations in a commercial space during 2027. The exemption would be in an amount not to exceed one million dollars on taxes owed and be effective in 2028. It would apply to persons that have not had a physical location in Oakland for the prior two tax years.· The measure also provides that the City Council may amend the Business Tax Ordinance in ways that are consistent with its stated purpose, but may not modify any tax rates or minimum tax amounts except as explicitly provided in the Ordinance.☆ FISCAL EFFECTS ☆The City Auditor estimates that, if passed, this measure would exempt approximately 12,000 existing businesses from paying City business tax. Collectively, those businesses would save $2.2 million. Oakland would forego that $2.2 million in business tax revenue for calendar year 2027.There would be additional costs of approximately $20,000 to notify tax payers.☆ SUPPORTERS SAY ☆Supporters include: This measure was proposed by Oakland Councilmembers Ramachandran and Unger and Mayor Lee, and placed on the ballot with unanimous support of the members of the City Council of Oakland.· Oakland small businesses are vital to the neighborhoods. It is important to find tangible ways such as tax relief to support their post-pandemic recovery.· Oakland should support measures such as this to encourage businesses to locate here rather than in neighboring cities..☆ OPPONENTS SAY ☆Opponents include: No opposition was submitted to Oakland's City Clerk· It is contradictory to be offering even temporary tax exemptions at the same time that Oakland has declared a state of fiscal emergency and is placing a parcel tax measure on the ballot.· There is no definitive data that shows these tax exemptions would have the desired impact on small businesses or be effective in attracting new businesses to Oakland. ………………………………………………………………................................. ★ OFFICIAL INFORMATION ★The source of this information is documents on the Website of the City of Oakland.☆ BALLOT TITLE ☆PROPOSED MEASURE TO AMEND THE CITY OF OAKLAND'S BUSINESS TAX ORDINANCE TO PROVIDE TEMPORARY BUSINESS TAX EXEMPTIONS FOR CERTAIN SMALL BUSINESSES AND FOR CERTAIN BUSINESSES ESTABLISHING NEW COMMERCIAL LOCATIONS IN THE CITY).☆ IMPARTIAL ANALYSIS ☆ This measure would amend Oakland's Business Tax Ordinance (Oakland Municipal Code, Chapter 5.04) to provide temporary business tax exemptions for certain small businesses and for certain businesses establishing new locations in commercial spaces within the City of Oakland("City"). The City's Business Tax Ordinance requires that every person engaging in business activities within the City pay an annual business tax and obtain an annual business tax certificate. For a business receiving their first- or second-year business tax certificate, the required business tax is based on actual gross receipts for those years. For the third-year tax certificate and all subsequent years thereafter, the required business tax is based on gross receipts in the prior year. This measure would provide a one-year exemption for the required business tax forbusinesses with annual gross receipts of$1,000,000 or less, in the business activity classifications of retail sales, grocers, business and personal services, recreation and entertainment, and manufacturing. Eligible small businesses would receive the exemption for the 2027 tax year. The measure would also provide a one-year business tax exemption for persons thatestablish a new business location in a commercial space in the City between January 1, 2027 and December 31, 2027, effective for the 2028 tax year. The exemption would be in an amount not to exceed $1,000,000 in owed liability per tax year. This exemption would be available for persons that have not had a physical location in the City for the prior two tax years, as defined in the measure. To be eligible for either exemption, businesses would have to timely file for and obtain an annual business tax certificate. A person would not be eligible for either exemption if they had failed to accurately make business tax payments in the prior two years or otherwise had a delinquent tax account. The measure would authorize the City Council to extend both tax exemptions on an annual basis for up to three additional years, by a vote of at least six members of the City Council and with a finding that the tax extension will not directly result in the loss of employment or salaries by people employed in the City's civil service. The City's current Business Tax Ordinance was approved by voters in 2022 and provides that the City Council may not amend the Ordinance to modify any tax rates, including minimum tax amounts, except as for specified cannabis businesses. This measure is therefore being submitted to voters for approval, although the measure would not impose, extend, or increase any taxes. The proposed measure would clarify that while the City Council may not amend theBusiness Tax Ordinance to modify any business tax rates or minimum tax amounts, except as explicitly provided, the City Council may make other amendments to the Ordinance if the amendments are consistent with the Ordinance's purpose. This measure was placed on the ballot by the Oakland City Council. The measure will take effect only if a majority of voters voting on this measure vote yes. Ryan Bichardson City Attorney. ☆ IMPARTIAL FINANCIAL ANALYSIS ☆SummaryThis measure would amend the City of Oakland's Business Tax Ordinance (Municipal Code Chapter S.04) to exempt certain businesses from paying City business tax. Exempted business categories would include retail sales, grocers, business and personal services, recreation and entertainment, and manufacturing businesses with annual gross receipts/sales of $1 million or less. This exemption would begin in calendar year2027. The measure would also exempt businesses that open new commercial locations in calendar year 2027 that acquire real property or a lease for at least six months and did not have a physical location in the City for the prior two tax years. To be eligible for this exemption, a person must have obtained an annual business tax certificate and paid applicable business fees, and the exemption amount must not exceed $1 million per tax year starting in calendar year 2028. Specific eligibility requirements apply. If passed, the City Council may extend this tax exemption for eligible existing and new businesses annually for three years, so long as certain minimum requirements are met.Financial AnalysisIf passed, this measure would exempt around 12,000existing businesses from paying City business tax, resulting in approximately $2.2 million savings for eligible City businesses and a loss of approximately $2.2 million in business tax revenue for the City of Oakland for calendar year2027. In addition, if the measure passes, the City will be required to notify taxpayers. The estimate to mail notices to the taxpayers would total approximately $20,000 in the first year.The impact of this measure on business operators' behavior, consumer behavior, and other economic variables that may affect City revenue is beyond the scope of this analysis.Information in our independent analysis is based on the best information available at the time of this analysis. MICHAEL C. HOUSTON City Auditor. ☆ FULL TEXT OF THE MEASURE ☆The full text of the measure may be found on this page of the City of Oakland's Website. Scroll down to page 6: ATTACHMENT 1
