City council gives business coalition a three-year crack at fundraising before implementation
The Vancouver City Council may approve a delayed implementation of the widely unpopular B&O tax until 2010. The delay would allow the Coalition for a Strong Economy & Community – formed specifically to oppose the tax – to try its hand at generating the $10 million the tax would have brought. Under the new proposal, if the coalition is successful, the tax will not be implemented at all.
An alternative plan from the coalition is still on the table. It includes a $50 per employee head tax, with a three-year sunset clause, among other long- and short-term solutions such as parking rate increases, local improvement districts and a street utility tax.
During Monday’s meeting, among other things, the council also considered a $28 million general obligation bond to meet funding needs in the interim. Mayor Royce Pollard said a move like this would require the three-year sunset clause be removed from the coalition’s proposed head tax, should it be enacted.
Beth Quatarolo, president of the Greater Vancouver Chamber of Commerce, is happy the coalition was heard, but remains wary of the three-year "deadline" for the B&O implementation.
"The fact that the conversations are happening is good, and we’re still committed to finding a solution other than the B&O tax," she said.
Still, Quartarolo expressed concerns that, if the coalition fails to make their numbers in three years, the head tax, minus a sunset clause, would only compound the B&O tax in 2010.
"That would not be good, to end up with a head tax and a B&O," she said.
Quartarolo’s concern is shared by the coalition. Certainly the spirit of cooperation had been waning in the debate, and even hours before the Monday session, business leaders were ready to skip town in order to avoid the tax. Under the revised structure only businesses with gross receipts of $50,000 or more would be taxed. Car dealers were among the most ardent adversaries, pointing to their narrow profit margins and a 1996 pledge by the city never to bring the B&O tax back, as reasons to leave.
"Our margins are so narrow that the B&O tax is just too much," said Vancouver Ford General Manager John Creeden.
"There are a number of things businesses can do to structure their operation to avoid the B&O tax," he said. "One is to relocate (out of city limits). I can buy a lot of real estate for what my B&O obligation would be annually."
Creeden mentioned a plan by himself and other dealers to scrap their lots in favor of an "auto delivery center," a sort of clearing house that would be located outside Vancouver, where they would conduct all sales, avoiding the tax altogether. Remarks like these clearly resonated with the council.
"(Major businesses) are ready to move out of Vancouver once the tax is implemented," Councilman Tim Leavitt said. "I’m not ready to move the B&O forward. I don’t think the B&O is the right tool. It’s like using a hammer to turn a bolt."
Council members cited the fierce opposition to the proposed ordinance as the chief catalyst for their decision.
"In my evaluation, there is just enormous opposition to the tax," said Councilman Dan Tonkavich. "It’s an onerous tax, it discourages new businesses and it does more harm than good. I think we should say that we are going to resist this very tempting revenue source and that we should take the business community at its word and let them work with us."
The rest of the council voiced an unwillingness to implement the B&O tax as well, but maintained their misgivings on other options.
"I don’t like the head tax," said Councilwoman Jeanne Stewart, "I’m concerned how the head tax would affect businesses with six or less employees."
Mayor Royce Pollard put his support firmly in the coalition camp.
"I, for one, am willing to work three years to make this happen," he said. "We’re trying to offer (the coalition) a hand of cooperation."
Added council member Pat Jollata: "Which is what they offered us."
Stewart indicated that she at the very least is willing to let the business community jump in and help.
"I don’t have an answer. I’m still listening," she said.
Pollard remained positive the business community would be successful.
"In three years, we can do it," he said. "Even if we fall a little short, that’s negotiable."
A public hearing will be held on Nov. 20.
