Archived Story

Council mulls business-license issue

Published 1:33am Sunday, April 28, 2013

Washington’s business-license fee schedule could become a thing of the past.

During the City Council’s budget work session Thursday, the idea of replacing that fee schedule with a “registration” fee for businesses and industries surfaced. Over the past several years, the city has modified its fee schedule for business licenses (also known as privilege licenses). In March, City Manager Josh Kay proposed a new business-license fee schedule, which would take effect July 1 when the 2013-2014 fiscal year budget for the city begins.

At Thursday’s meeting, Councilman Doug Mercer suggested the council further discuss possible changes to the business-license fee schedule.

Mayor Archie Jennings suggested the city consider replacing the existing fee schedule with a “registration” fee.

“The challenge with the privilege license is — I don’t know if we can get that right. It’s hard to really be fair to businesses of a different nature and different sizes, some that are new, some that are in economically challenging environment. There are so many that are exempted from it. The equity in it seems really difficult to maintain,” Jennings said. “One of the proposals that is out there — again I appreciate the creativity of staff and council at looking at it — is essentially doing away with the privilege license and replace it. Perhaps, with a registration fee with smaller banding, or few bands, broader bands. There’s a proposal that we’ve had put before us that would actually be a reduction or at least a flat entry for most of the businesses. I would submit to the council that we read the tea leaves because there are a couple of bills in Raleigh now that are basically hinting at the future elimination of our ability to even charge a privilege-license (fee). Those may or may not pass this year. We don’t know.”

Jennings said he believes the business community putting about $300,000 “back in the hands of business owners” who could use that money to expand and job creation.

The mayor urged the council to further explore getting rid of the business-license fees and replacing them with the registration-fee plan. No details associated with the registration-fee plan surfaced during Thursday’s meeting. City staff and the council would hash out those details as the budget process proceeds, the mayor indicated.

The existing fee schedule for business licenses covers four categories: service establishment, retail merchant, manufacturing and wholesale merchant. The existing fee schedule is $50 for the first $25,000 in sales and 80 cents for each additional $1,000 in sales. The maximum fee is $1,500. The fee for each Internet sweepstakes machine is $250.

Some fees are set by North Carolina law, which also exempts some categories such as lawyers and doctors.

Under the proposed fee schedule, service establishments, retail merchants and wholesale merchants would pay $50 for up to $80,000 in annual sales. For a business that has $80,001 to $1 million in annual sales, the fee would be 35 cents for each $1,000 in sales. For a business that has $1,000,001 to $15 million in annual sales, the fee would be 70 cents for each $1,000 in sales. A business that has more than $15 million in annual sales would pay $1 for each $1,000 in sales.

The maximum any business would pay would be $20,000.

For a manufacturer, the fees for the other categories would apply, but with a maximum fee of $10,000. The fee for each Internet sweepstakes machine is $1,000.

Currently, a business with $250,000 in annual sales pays $190. If the proposal were approved, that business would pay $109.50.

Currently, a business with $1,000,001 in annual sales pays $640. If the new fee schedule were imposed, that business would pay $372.

Currently, a business with $5,000,001 in annual sales pays $1,500. If the proposal were approved, that business would pay $3,172.

Currently, a business with $35 million in annual sales pays $1,500. If the new fee schedule were implemented, it would pay $20,000.

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