National City business owners are raising concerns over a proposed business license tax reform, which would shift the city’s current model to a gross receipts tax as officials work to bridge a persistent budget deficit.
The Financial Context of the Proposal
National City is currently facing a budget deficit driven by a combination of rising operational costs and stagnant property tax revenues. According to reports from the city manager’s office, the municipality must identify new revenue streams or face potential reductions in essential city services. Public safety, which represents 70% of the city’s general fund, remains a primary concern for officials looking to maintain service levels while balancing the budget.
Karen Azhocar McManus, executive director of the National City Chamber of Commerce, noted that the city has already taken steps to address the shortfall, including internal cost-cutting measures. “The city has looked inside its own shop to see what they can do to reduce it. I believe it has been reduced about 12 million now. But what it what it. That’s still significant,” McManus stated regarding the current fiscal gap.
Impact on Local Businesses
The proposed tax structure would apply to approximately 5,000 businesses within National City. The shift from a net-income-based model to a gross receipts model is the focal point of the business community’s opposition.
Mark Philip Valerio Santos, owner of the long-standing Valerio’s Bake Shop, expressed significant concern regarding the potential for increased operating costs. “It was horrific just to know that the city is planning on taxing gross receipts through business licenses was awful because all of the businesses here in National City struggle one way or another,” Santos said. He further emphasized that the external appearance of a business’s success does not always reflect its true financial health. “A lot of business here in National City. We’re struggling. It may look busy but it’s hard,” he added.
The National City Chamber of Commerce has characterized the current relationship between the city and the business community as “tender,” suggesting that many local owners feel they were not adequately consulted during the initial development of the tax proposal.
Economic Concerns for Consumers
Business owners have signaled that if their operating costs rise due to the new tax, those expenses may ultimately be transferred to the customer. “If businesses have an increase in cost right that will also go towards the consumers,” Santos stated.
The primary point of contention remains the difference between gross and net income. As McManus explained, “It’s going to be based on what their annual income is or gross receipts. And that’s the issue. The gross receipts is much different than the net.”
Public Consultation and Next Steps
The meeting is set for Wednesday at 6 p.m. at the National City Chamber of Commerce.
Related reading