For the second election cycle running, Upland city officials are looking to effectuate a tax increase, this time by appealing to voters to allow City Hall to change the business licensing schedule it has had in place for more than three decades.
In 2022, Upland officials qualified the placement of Measure L on that year’s November ballot. Measure L asked for authorization to impose an added one cent per dollar sales tax on all retail transactions within the city involving merchandise upon which sales tax is permitted under California law, that is, excluding groceries and medicine. Ultimately, the city’s voters rejected Measure L, with 10,222 voters or 44.6 percent in favor of it and 12,697 voters or 55.4 percent opposed to it.
In California, any new tax must be approved by a vote of the people to pay that tax.
Members of the Upland citizens group who effectively opposed Measure L expressed hope Upland municipal officials would embrace the concept of Upland as a consumer friendly city which eschewed taxes and would appeal to the region’s shoppers in that fashion, pointing out that relative to the sales tax burden in nearby Ontario at 8.75 percent; Montclair at 9 percent; Chino at 8.75 percent; and Pomona at 10.25 percent, Upland’s 7.75 percent sales tax offers an opportunity for residents of the west end of San Bernardino County and the east end of Los Angeles County patronizing Upland’s merchants to save money, particularly on big ticket items such as cars and major household appliances.
Upland’s solons – Mayor Bill Velto, First District Councilwoman Shannan Maust, Second District Councilman James Breitling, Third District Councilman Carlos Garcia and Fourth District Councilman Rudy Zuniga – and City Manager Michael Blay and Assistant City Manager Stephen Parker in their wisdom believe that Upland cannot realistically make up in volume of sales what it is losing to other cities by not matching their higher sales tax rate. In the last two years, city officials in Ontario and Chino succeeded in getting its residents to increase sales tax in their cities by 1 percent.
Having seen how convincingly Upland’s voters consigned Measure L to defeat, this time Upland officials are trying to convince residents of the City of Gracious Living that by City Hall upping what businesses will be charged to operate within the city’s boundaries, the entrepreneurs running them will absorb that new cost and not pass it on to their customers.
The city council on July 22 voted to send to the San Bernardino County Registrar of Voters a measure revising the city’s business license schedule for inclusion on the November 5, 2024 ballot. Under the proposed measure, some of the city’s smaller businesses will see a modest $4 reduction in the cost of a business license. The lion’s share of businesses, however, will see the cost of business permits and fees skyrocket, with the ones in the highest bracket going up 3,414 percent.
The revisions in the measure call for reducing the minimum business license tax from $54 to $50 on 2,930 of the city’s 3,083 business grossing under $100,000 per year; reducing the taxes on 618 of the city’s 2,049 businesses making over $100,000 but less than $1 million per year and reducing the taxes on 18 of the 596 business in the city making over $1 million per year. At the same time, 153 businesses making under $100,000 per year, 1,422 businesses making $100,000 to $1 million and 578 businesses making over $1 million per year would have their taxes increased. Those in the top earning brackets would see the cost of a business license/permit, which is collected before taxes, jump from $864 to $29,500, subject to an annual consumer price index increase not to exceed 5 percent per year.
The new business permitting and taxing regime would establish a business license tax rate schedule based on annual gross receipts above the first $100,000 that differentiates between types of businesses, such that retail and general commercial businesses would pay 0.075% of gross annual receipts; contractors would pay 0.2% of gross annual receipts; rental, commercial or residential businesses would pay 0.3% of gross annual receipts; general service providers – those being nonprofessional or semiprofessional type businesses, such as hair and nail salons – would pay 0.17% of gross annual receipts; and professional service providers would pay 0.175% of gross annual receipts.
Overall, it is anticipated that, if passed, the new business license tax will produce approximately $3.5 million additional revenue to the city annually.
Semantics were at play in the city’s presentation of the tax proposal. While some admire stability and consistency in their government, in this instance, Upland officials see shaking things up as something positive.
“Upland’s business license tax, which hasn’t been modified in almost 30 years, has an outdated structure,” Blay and Parker wrote in their report on the measure with regard to the cost of a business license before taxes. “The largest businesses in the city, with revenues of over $100 million a year, pay the same rate as businesses that make $1.4 million a year – $864.”
At play as well are the euphemistic devices that are now in vogue among cities trying to convince their citizens to support a new tax. In 2022, Upland officials called the proposed sales tax “a retail transactions and use proposal.” This year they are calling the taxing overture the “Upland Public Safety, Streets, City Services Measure.”