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San Francisco Leaders Support Business Tax Reform Proposal to Strengthen City Economy
San Francisco Leaders Support Business Tax Reform Proposal to Strengthen City Economy
Contact: mayorspressoffice@sfgov.org
San Francisco Leaders Support Business Tax Reform Proposal to Strengthen City Economy
Controller and Treasurer release final business tax reform proposal in response to call from Mayor Breed, Board President Peskin, and Supervisor Mandelman
7 May 2024, San Francisco, CA: Today City leaders responded to the final business tax reform proposal issued by the Controller and the Treasurer, saying that the measure is the right proposal to support San Francisco’s long-term economic success in a post-COVID world.
In July 2023, Mayor London Breed, Board of Supervisors President Aaron Peskin, and Supervisor Rafael Mandelman asked then City Controller Ben Rosenfield and Treasurer José Cisneros to initiate a comprehensive process to propose reform of the City’s business tax structure. The goal was to convene the business community and other stakeholders to develop specific reform recommendations that could lead to a measure on the November 2024 ballot.
After months of engagement, deliberation, and analysis, Controller Greg Wagner, former Controller Rosenfield, Chief Economist Ted Egan, and Treasurer Cisneros have issued their final proposal that advances key economic goals for the City while remaining revenue neutral. With support from the Office of Economic and Workforce Development, they held 30 group meetings and three large group round tables with small and large businesses, organized labor partners, and other stakeholders to inform the work.
Key elements of the proposal include:
- Exempting more than 2,500 small businesses from the tax by expanding the Small Business Exemption to $5 million dollars
- Lowering taxes for hotels, arts, entertainment, and recreation
- Reducing volatility by ensuring taxes are not overconcentrated
- Reducing disincentives for bringing workers back or locating in San Francisco
- Simplifying the overall tax structure to be more predictable
The proposal has earned the support of Mayor Breed, President Peskin, and Supervisor Mandelman. Now, a group led by small business leaders is initiating an effort to bring this measure to voters.
“We are working every day to support our economic revitalization and create a more vibrant future for Downtown and our City,” said Mayor London Breed. “San Francisco is a center of innovation and opportunity, but the world has changed after COVID. We need a business tax structure that reflects our new reality, and that supports and encourages businesses large and small to thrive. This proposal is the result of a collaborative approach that will deliver a tax system that will help San Francisco grow and fund critical City services throughout our neighborhoods. I want to thank both our current and former Controller and our Treasurer for their work and all those who stepped up to participate to get this right.”
“San Francisco’s economic recovery is a top priority, and that has meant taking a hard look at business tax reform,” said Board of Supervisors President Aaron Peskin. “I’m happy to see small business advocates pushing this important change forward today. This measure cuts taxes for restaurants and small businesses while protecting important sources of tax revenue for essential city services that benefit everyone. This is another example of what we can accomplish when we work together collaboratively, and I hope the voters will embrace this important policy.”
“The pandemic changed everything, including especially our economic condition,” said Supervisor Mandelman. “San Francisco must adapt, and this business tax reform proposal will position the city for economic recovery, job growth, and a sustainable and resilient city budget. It encourages job creation in San Francisco, supports our small businesses, and protects critical city services. Getting to this point was no easy task, and we owe an enormous debt of gratitude to Controllers Wagner and Rosenfield, Treasurer Cisneros, and their respective staffs for all their great work.”
“I’m very pleased that we’ve landed on a proposal with clear and implementable changes that feel balanced,” said Controller Wagner. “And I’m so appreciative of all the work of my predecessor and the stakeholders who’ve participated in the many thoughtful, and not always easy, discussions that got us a plan to aid the City’s post-pandemic recovery and benefit San Franciscans.”
“It’s no secret that our current taxes are complicated. These proposed changes to our Business Tax laws reflect months of careful analysis and feedback from stakeholders to reduce the complexity and volatility of our taxes, all while preserving critical revenue for the City’s ongoing needs,” said Treasurer José Cisneros. “Many of these changes are simple, but impactful: cutting the number of tax categories in half, exempting thousands of small businesses from taxes, and aligning our filing deadlines with the IRS. Taxes may not be fun to pay, but I’m encouraged by these proposed reforms that will make it easier for businesses to comply with the law.”
“Our report last year highlighted serious risks to the City’s tax base and downtown economy because of remote work,” said Chief Economist Ted Egan. “This measure will protect the tax base, provide relief for hard-hit small businesses, and reduce the tax consequences of growing jobs and leasing office space in San Francisco.”