New Business Tax Increase Receives Mixed Reviews

Residents, business owners and elected officials expressed mixed opinions regarding the new business license tax in Redwood City in the wake of .

On Tuesday, 55% of voters approved Measure M which will increase the city's business license tax from the current $37 to $58, over the course of a three year span.

Over that same time period, the city will also impose a $38 fee on business owners for each full-time employee, which is a $14 increase from the current fee. And the fee for part-time workers will increase by $7 to $19 per worker.

After the three year lifetime of increases, the tax will rise annually based on the consumer price index.

City Councilman Jeff Gee applauded voters for approving the tax, and said that increasing tax revenue is part of a three-pronged approach to solving the city's long term budget woes.

"I'm pleased with the results," said Gee of the tax being passed. "This gives us breathing space for financial sustainability."

The tax, combined with the newly passes hotel tax, is expected to generate $1.5 million for the city annually, according to a city report.

Gee said the additional tax revenue combined with the city receiving bargaining concessions from city labor unions and identifying other income sources and savings will go toward achieving financial solvency for years to come.

Yet still, some Redwood City residents do not share the councilman's same enthusiasm about the tax passing.

Laura Whittaker commented that rather than raise taxes, it was the responsibility of the city staff and council to slash spending in order to achieve a sustainable business model.

"Our city council needs to do their jobs and make the cuts needed to balance their budgets," she said on the Patch site.

Resident Beth Mostovoy and small business owner of Honeybear Prints wrote on Patch's Facebook page, "It is DEFINITELY a hardship for small business... especially when there is even smaller busines happening!"

Meanwhile, local merchant Mary Albitz, owner of in Redwood City, shared a more reserved sentiment.

She agreed that businesses in Redwood City should probably be taxed more, noting that the local rates are lower than other cities in the region. But she expressed frustration regarding how aggressively the tax increases over the course of a short amount of time.

Albitz suggested that she might prefer to pay a lower percentage tax on a bi-annual basis as an alternative to what was passed. 

In response, Gee noted that the tax will be phased in over the course of a three year span, and that 1994 was the last time the business license tax was increased.

But Albitz also said that she believed the city staff and elected officials could have done a better job considering the input of local businesses when conducting public outreach to gain support for the taxes.

She said that she did not see any signs from city representatives that would indicate either staff or council members seriously took into consideration any suggestions made by local business owners regarding the tax prior to its approval.

"They set up meetings under the guise of getting feedback, but the plan never changed the entire time," she said. "My interpretation is that they didn't really care what our feedback was."

Gee said that though he was not part of the outreach process, he agreed that there could always be improved communication between the city and its residents and local businesses.