from the Oakland Chamber of Commerce
In late May 2022, the Oakland City Council voted to place a ballot measure on the November 2022 ballot that will change the City’s current business tax system from a flat tax to a progressive tax. The proposed progressive tax increases rates on Oakland businesses in selected industries and gross receipt revenues.
The action taken by the City Council was the culmination of an effort that began in July 2020, led by Council President Nikki Fortunato-Bas, to update Oakland’s business license tax as well as use that opportunity to raise revenues for the City’s general fund – a fund that the City Council can spend at their discretion.
When the proposal was brought forward in July of 2020 the business community immediately supported moving to a progressive tax rate where those that make more pay more. However the size of the proposed tax increases - for some businesses upwards of 800% - was of great concern particularly when businesses were reeling from the initial impacts of the COVID 19 pandemic.
After a significant advocacy effort led by the Oakland Metro Chamber, the City Council chose to defer ballot consideration to the Nov 2022 ballot, during which time more study and input would be solicited. The Chamber continued its advocacy and education outreach across Oakland during that time.
In the fall of 2021, the Chamber learned of additional, and more significant, tax increases being discussed. As a result, the Oaklanders Together Coalition was formed. Oaklanders Together is a collaboration of select Oakland’s Business Improvement Districts, Multi-cultural Chambers of Commerce, and partner business organizations representing thousands of businesses in every district across Oakland- 80% of whom are small and local. The Coalition led an effort for an alternative tax proposal that would provide significant relief for Oakland’s small businesses, fund city services, update the tax structure, and save Oakland jobs.
Oaklanders Together advocates for Oakland's entire business ecosystem, one that supports job-creating industries as well as preserves our small and vibrant local businesses - all necessary for Oakland's long-term economic sustainability. The coalition developed and circulated a petition to voters for a moderate and progressive tax measure for the November ballot. The Oaklanders Together measure provided for a fair progressive tax that required any revenue increases to be spent on specific issues important to Oaklanders including; economic relief for small businesses disproportionately impacted by the pandemic, illegal trash and dumping, and services for Oakland’s unsheltered neighbors.
In an effort to not confuse voters with competing measures, tax rate structures, and expenditure priorities on the ballot, Oaklanders Together representatives and members of Oakland’s public employee unions came together to seek a compromise. After months of negotiations, an agreement was reached that resulted in the City Council's action in late May 2022 to place one measure on the November ballot supported by Business and Labor. Although these tax increases are substantive, for some larger companies up to a 400% increase, due to the advocacy and legislative efforts led by the Oakland Metro Chamber there are significant economic savings for local and small businesses and thousands of jobs saved across Oakland - as compared to more severe initial proposal.
So, what does the ballot measure mean for Oakland Businesses?
1) It modifies gross receipts tax rates from a flat rate to a progressive structure where those that make more pay more – this change is consistent with other municipal jurisdictions' tax policy changes over the past few years and one that the Oakland Metro Chamber has supported since it was first brought forward in July 2020.
2) It increases the gross receipts tax rates for select business categories – plainly stated - gross receipts taxes will go up as your revenue increases. The table below is what was approved by the City Council and is represented in the ballot measure that will appear on the November 2022 ballot.
3) It lowers the tax rates on businesses in certain categories with gross receipts under one million dollars annually, particularly those industries hit hardest during the pandemic.
So, what does this mean for your business?
1) The table below lists the impacted categories, current flat tax rates associated with those industries, and proposed progressive tax rate increases.
2) If passed in November these increases will take effect in Jan 2023 and apply to that and future tax years' gross receipts.