B&O tax is bad – now and three years from now
Lee Rafferty
is the co-owner of Spanky’s, a consignment shop with locations in downtown Vancouver and Cascade Park. She represents Vancouver’s Downtown Association and is a member of the Coalition for a Strong Economy & Community.
Reinstatement of a Business & Occupation tax is like taking Vancouver’s "Open for Business" sign down and replacing it with a "Closed for Business" billboard. The Vancouver City Council’s recent decision to delay the B&O until 2010 only postpones the inevitable negative effect on our community.
The past few years have been an exciting time for all sizes and types of businesses in Vancouver. When it comes to economic development, a little momentum goes a long way. Creating a healthy business climate has had big payoffs toward economic gain and stability for the overall community. Restaurants such as Tommy O’s, Little Italy’s and The Old Spaghetti Factory; specialty shops such as Spanky’s, Willows and Ramona’s; and now large retailers such as Best Buy call Vancouver home, along with high-tech industries and even world headquarters of companies like Nautilus.
For my business, a small family-owned consignment store with locations in downtown Vancouver and Cascade Park, it means that it will be harder for me to make ends meet for us and our employees. It’s another tax to pay. We all know how taxes add up. We may have to raise prices despite already thin margins. The B&O is a regressive tax charged on gross revenue, regardless of profit. We may have to offer less for consignments.
Our customers, employed by larger businesses in the city, may face layoffs due to cutbacks or relocation to cities like Camas and Battle Ground or states like Idaho and Vermont, where the business climate is friendly. Potential customers may never see what my business offers because their companies will never locate here.
Like so many businesses in a region that borders a non-sales-tax state, Spanky’s faces a daily struggle to compete. Taxes quickly add up and can devastate a small or emerging company like ours. The Business & Occupation tax proposed by the city of Vancouver to raise $10 million to $12 million per year is bad for business – all business, large and small.
Why? Costs are up, competition is up, and pressure is up. Now there is a new source of pressure as our city government leaders, faced with a tight budget of their own, are proposing that the solution to the city’s general budget issues is to tax the gross revenues of our small business.
This issue deserves fresh approaches and new cooperation. Vancouver should seize the opportunity to be innovative.
As a member of the Coalition for a Strong Community and Economy, a business task force created to seek alternative city financing options, I support the coalition’s creative approach to the city’s long-and short-term funding needs. The coalition proposal spreads the tax base more broadly than general business, creating built-in funding stability and fairness.
The coalition is proposing a variety of solutions, including:
• A moderate business license fee surcharge.
• A communitywide property tax lid lift.
• Vigorous pursuit of state and county funding options.
• Aggressive city spending controls.
The council may vote in some of these recommended options, and that would be a step in the right direction. But the accompanying ordinance to bring back the B&O in three years – unless all designated funding needs are met through other means – presents the business community with an uncertain and ominous future.
Let’s not give in to the exhaustion that we all feel from trying to work through these financial issues for two years. We can solve the problem if we let go of the dream of a one-size-fits-all answer and embrace an approach that accepts the business community stepping up to help move toward a multi-pronged approach. This issue deserves patience, persistence and respect. Will it be easy? No. Will it be painless? No. Will it bring better health to our entire community? Absolutely. Let’s do what it takes to keep Vancouver open for business.
