Santa Clara City Council: Business Tax Increase Set For November Ballot

Silicon Valley Voice

by David Alexander

July 13, 2022 - After a week of deliberation, the Santa Clara City Council decided to alter the original proposal for a ballot measure that would increase taxes on businesses.

Last week, the Council deferred the item after hearing strident commentary from the [Silicon Valley] Central Chamber of Commerce that the proposed tax was draconian. The originally proposed tax was slated to generate $9.5 million for the City to chip away at its looming $20 million deficit that City employees attribute to the pandemic.
Two new proposals saw discussion Tuesday night. One was a headcount flat tax that would require businesses to pay $45 per employee, and the other would require $45 per employee for up to 500 employees with businesses with more than 500 employees paying $60 per employee.

Councilmembers Kevin Park, Karen Hardy and Raj Chahal said they tried to weigh the need to inject the City’s coffers with cash with the desire to avoid burdening small businesses.

Hardy said the flat tax made the most sense. “I want to think in the long-term and the long-run,” she said. “I want to send the message that we like our businesses. We want our business here.”

Still, small business owners as well as the Chamber still opposed the hike, saying it places an undue burden despite the subsidy the City proposed.

Christian D. Malesic, President/CEO of the Silicon Valley Central Chamber of Commerce, said the City is only considering increasing the business license tax, which has not been updated since 1992 because the pandemic struck.

The proposed hike, if passed by voters in November, would go into effect July 2023 and is estimated to generate $6 million for the City.

Mayor Lisa Gillmor agreed that the thresholds were unreasonable, calling them “onerous.”

“These numbers are just not reasonable,” she said. “They are going to be burdensome.”

Still, the Council majority disagreed. Chahal said the update is “not exorbitant.”

“We have dwelled on this thing in a very reasonable fashion. It is the right time to make this move,” he said.

The Council voted 5-2 to put the measure on the ballot, with Gillmor and Councilmember Kathy Watanabe voting “no.”