1997 AGN AUG 19 I04 - Laserfiche WebLink

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r CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF JULY , 19 7 /?9 7 TO: Honorable Mayor and City Council APPROVAL: Graci rmon, Ac . City Manager ",w FROM: taviAm o a Community Dev opine Director SUBJECT: Implementation of a Business License Tax CAP DATE: July 9, 1997 BACKGROUND: Title 5 - Business Licenses and Regulations of the Municipal Code for the City of Colton was first adopted in November, 1975. The objective of enacting a Business License Tax was to generate revenue to offset the continuing cost associated with providing public services. Since its implementation; there have been various amendments to the Business License Tax Ordinance, resulting in fee changes and minor tax schedule adjustments. The method currently used to calculate gross receipts tax is regressive in nature. As the base amounts increase in the classification range, the rate assessed per thousand dollars is reduced as the business generates additional revenue in gross receipts. DISCUSSION/ANALYSIS: Staff has been requested to re-examine the current method used to calculate the business license tax, by comparing the implementation of a CAP or a Not to Exceed amount due on gross receipts. A review of the City's top 1,000 revenue-producing businesses reflects a significant amount of revenue generated by business license tax. To determine what the projected financial impact to the City would be if a CAP were implemented, staff performed the following analysis: CAP PROJECTED REVENUE LOSS PERCENTAGE $10,000 $ 7,372 1-5% $8,000 $ 14,535 6-11% $6,000 $ 29,015 12-18% $1,000 $206 829 65-77% The loss in revenue as projected above will have an immediate and significant impact if a CAP is implemented for Calendar Year 1997. The potential loss in revenue will also continue every year thereafter. Revenues generated by the City reflect businesses located both within and outside of the City limits. Item No. 4