02-04-1992 - Business License Tax Rate Changes0
• City of West Covina
Memorandum
TO City Council
AGENDA
FROM City Manager
ITEM NO. J-2
SUBJECT: BUSINESS LICENSE TAX RATE CHANGES DATE February 4, 1992
SUMMARY:
Councilmember McFadden has requested a report on the impact of
reducing business license tax rates by 5%, 10% and 15%. Staff has
prepared a report indicating the impacts of these, potential
reductions on the City's revenues and on sample businesses.
ANALYSIS OF FISCAL IMPACT:
Since the Business Improvement Tax varies with the business license
tax, computations for both are shown below.
Business. Business
License Improvement
(Gen.Fund) (Restricted) Total
1991-92 Estimated Revenues
$7161-000
$425,000
$1,141,000
5% Reduction
35,800
21.,2.50
57,050
10% Reduction
71,600
42,500
114,100
15% Reduction
107,400
63,750
171,150
As can be seen, the general fund would lose up to $107,400 annually
and the Business Improvement. Tax fund would lose up to $63,750
annually if rates were reduced as shown above.
The impact on five typical businesses in West Covina would be as
follows:
Current
5%
10%
15%
-
Tax
Savings
Savings
Savings
Commercial Property
Rental (Sample)
Business License
$3,165
$158
$317
$475
Business Improvement Tax
1,899
95
190
285
Manufacturing (Sample)
Business License
$ 513
$ 26
$ 51
$ 77
Business Improvement Tax
308
15
31
46
Professional Service (Sample)
Business License
$ 456
$ 23
$ 46
$ 68
Business Improvement Tax
342
17
34
51
Professionals (Sample)
Business License
$ 513
$ 26
$ 51
$ 77
Business Improvement Tax
385
19
39
58
Retail (Sample)
Business License
$2,519
$126
$252
$378
Business Improvement Tax
233
12
23
35
ALTERNATIVES•
The Council could increase, decrease or not change current
business license tax rates.
Earlier this fiscal year, the City Council waived the automatic
CPI increase in Business License Tax rates that would have
increased these rates by 4.5%.
Memo to City Counc�
February 4, 1992
Page 2
0
RECOMMENDATION:
Staff recommends that busines
this time and that the City'
during the budget process.
f
James E. Starbir
,;City Manager
JES/BP/srg
BUSLICTX
license tax rates not be changed at
entire revenue picture be reviewed