Santa Ana voters asked to restructure city’s business tax – Orange County Register


Santa Ana voters will be asked in November to consider a ballot measure officials say would restructure the city’s business tax rate, shifting the tax burden from small businesses to bigger ones.

Measure W, the “Santa Ana business license tax equity and flexible tax holiday measure,” would:

— change business license tax rates to a flat fee per business classification, plus an additional fee for every $1,000 worth of gross receipts;

— decrease the initial tax deposit new businesses must make to the city from $506 to $200;

— provide a tax “holiday” for unlicensed businesses or those with past-due taxes so they could obtain a license or pay past-due bills, without facing penalties.

“Small businesses in Santa Ana have been paying a higher tax rate than big businesses for their business license. It’s time for an equitable solution,” City Council members Phil Bacerra and Johnathan Ryan Hernandez wrote in support of the measure on the ballot.

No one submitted an argument against Measure W, according to the Orange County Registrar’s office.

RELATED: Santa Ana’s Measure X includes lifetime term limits for mayor, City Council

RELATED: Left out of Measure X: Can noncitizens vote in Santa Ana?

The business community has been asking city officials to look into making changes that would have all businesses “pay for their fair share and not a disproportionate share,” Bacerra said in an interview. “Why would you want your smaller businesses to pay a larger share of taxes?”

If approved, approximately 91% of businesses in the city would pay less in taxes, city officials said. The remaining 9% would pay more.

“It’s overall net neutral to the city,” Kathryn Downs, Santa Ana’s finance director, told a committee that oversees fund money from an earlier tax measure during a Sept. 14 Zoom meeting.

Under the current tax structure, the more money a business makes, the greater the tax break.

If Measure W is approved, “everybody will pay the same rate,” Downs said.

For example, home-based businesses would pay a basic rate of $15 plus $.65 in taxes per $1,000 revenue generated. Currently, home-based businesses pay $.50 per $1,000, up to $100,000; $.30 per $1,000, up to $500,000; and $.20 per $1,000, up to $1 million.

Additionally, the measure would eliminate exemptions that apply to utility companies; those would then be subject to a business tax with a cap of $100,000 per year.

For a large company like Southern California Edison, Downs told the committee, $100,000 is a small amount, and city officials do not anticipate the added taxes will be passed on to customers.

David Eisenhauer, a spokesman for SCE reached Thursday, declined to address whether any additional costs to the company would trickle down to Santa Ana’s residents.

“We are monitoring the proposal like we do with any property proposal,” Eisenhauer said.

While doing away with some exemptions, Measure W would create an exception for certain childcare businesses. A business license will not be required of residents offering child care services to their own children, grandchildren, nieces and nephews, and foster children within the home, under the ballot measure.

The City Council unanimously approved placing the measure, related to Santa Ana’s non-cannabis businesses, on the Nov. 8 ballot. Council members are addressing cannabis taxes in a separate city ordinance.

Also before Santa Ana voters is Measure X, a proposal to amend the city charter by imposing lifetime term limits on candidates: three terms of four years each on the council and four terms of two years each as the city’s mayor — a total of 20 years.

For either measure to become law, a simple majority of votes is required.

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