Privilege Tax Gives Token Tax Relief

Some political ploys are just so transparent. The former city council passed the business privilege tax over the strong objections of the business community. These objections were based both on the unfairness of the tax, the paperwork associated with the tax, and the cost of the tax. As noted in an earlier post (click here to read), a change in only six votes in the election would have led to repeal of the business privilege tax.

The city manager is trying to pass off of a one cent decrease in property tax as the fruits of the business privilege tax. With more council members who supported the tax coming up for re-election in 2009, he hardly had any choice. The AFP crowd will likely be rolling in from Raleigh and they have a pretty good track record.

From a financial point of view, most businesses may actually get net "tax relief" from the one cent reduction. They would have gotten the same amount from the reduction of the fund balance. Others businesses, especially those having to deal with multiple business licenses, would be better off not having the privilege tax.

So here is a proposal: print the tax bills so that businesses have a choice--kinda of a check-off.
Let them choose to be exempt from the privilege tax and pay last year's tax rate or remain covered by the business privilege tax and take the 1 cent tax reduction. That will give a real hard-nosed look at the situation. This idea may sound a little goofy and would certainly create more work for the city tax department, but it makes about as much sense as the business privilege tax... doesn't it.