A number of cities across the Bay Area have been pursuing initiatives to increase taxes on businesses with stated goals of generating revenue amid mounting housing affordability, transportation, and homelessness crises. This week, the City Councils of Mountain View and East Palo Alto passed measures going on November 2018 ballots to place a head tax and parcel tax, respectively, on businesses meeting certain parameters. Meanwhile, San Francisco and Cupertino withdrew their measures to increase business taxes following collaboration with affected companies. In San Francisco, Supervisor Aaron Peskin replaced his ballot measure to tax gross receipts of ride-hailing and autonomous vehicle companies with a per-ride fee that will be introduced through state legislation. Cupertino agreed to delay consideration of a head tax measure until 2020 after more thorough planning is completed.
The Bay Area Council shares the concerns of these cities to find solutions to our region’s problems. However, we are concerned that in an attempt to be seen as taking action on a timely issue, cities are increasingly turning to taxing businesses without sufficient analysis or stakeholder engagement. Without a thoughtful process, cities risk reducing employment and wage growth, affecting employees and constraining the region’s economic success. The Bay Area’s housing and transportation problems are regional in nature and a myriad of heavy-handed taxes on businesses across multiple cities discourages the potential for a coordinated, regional strategy needed to solve these major challenges. The Bay Area Council has written letters and testified at numerous City Council meetings on these issues, and has offered to partner with City Councilmembers and their staff to assist with their analysis. We are encouraged by the actions of San Francisco and Cupertino to work with affected companies and take the time to analyze the impact of the proposed taxes before sending measures to voters for approval.