B&O tax may be expanded to include more businesses

Blaine City Council may introduce modifications to the proposed Business and Occupation (B&O) tax, based on input from councilmembers and the public.

As it stands, wholesale and manufacturing businesses that gross $20,000 or more per year would be asked to pay a 0.2 percent B&O tax to help pay for city services.

However, at their February 25 meeting, city councilmembers discussed modifying the tax in various ways. Proposals included expanding the tax base to include retail and service businesses; raising the $20,000 gross receipts threshold to exempt very small businesses; introducing tax credits for businesses that create jobs; introducing a phase-in or “honeymoon” period for new businesses; and capping the tax collected at a maximum dollar amount per business.

“I think we could raise the [$20,000] threshold significantly to not have as great an impact on the really small businesses,” said mayor Bonnie Onyon at the February 25 meeting. “I also think we should think of adding the service sector, but again with a threshold that would be reasonable and not hurt the small companies.”

Mayor Onyon also spoke favorably about the proposal to give companies a tax credit based on the number of jobs they create. “I think that’s a great idea,” she said.

She also suggested putting a cap on the amount of tax collected from any business. “We could maybe have a max where they only pay a maximum amount up to a certain amount no matter how large a company they are or how large their gross receipts,” she said.

Some of the ideas would be easier to implement than others. For example, an established company could potentially re-form and reopen in order to try and take advantage of any special treatment given to new businesses.

As a result of the discussion, city council postponed their vote on the B&O tax ordinance to March 25. This will allow them to hold a study session on March 11 to discuss the various proposals.