Proposition F - Business Tax Overhaul

Summary

The proposed ordinance would amend the city’s existing Business and Tax Regulations Code in a number of ways, including discontinuing the City’s payroll expense tax, increasing gross receipts business tax rates, and increasing the number of small businesses exempted from the business tax. Overall business tax rates for some industries are increased, generally phased in over three years beginning in tax years 2022. Temporary rate reductions for tax years 2021, 2022, and 2023 are proposed for other industries heavily impacted by current economic conditions, including those paid by the hospitality, restaurant, and retail sectors. The proposed ordinance authorizes contingent taxes that would be imposed if two currently assessed dedicated taxes for homeless services and childcare are struck down by court action. The proposed replacement taxes are similar in structure to those dedicated taxes.

A "YES" vote on Proposition F is a vote in favor of eliminating the City's payroll expense tax. A "YES" vote is also a vote in favor of raising the gross receipts business tax rate while exempting more small businesses from that tax. A "YES" vote also permits the city to impose two new taxes in the event that the courts strike down preexisting taxes which fund homeless services and childcare.

A "NO" vote on Proposition F is a vote against eliminating the City's payroll expense tax. A "NO" vote is also a vote against raising the gross receipts business tax rate while exempting more small businesses from that tax. A "NO" vote also denies the city the authorization to impose two new taxes in the event that the courts strike down preexisting taxes which fund homeless services and childcare.

Arguments

"Gross receipts taxes are flawed because the tax burden does not correspond with the ability to pay. Measure F would place a significantly greater tax burden on start-up businesses, businesses with low margins and unprofitable businesses. In short, Measure F would make San Francisco’s flawed gross receipts tax even worse by making it more targeted and less competitive – all while encouraging business to move jobs and investments out of the city.", in opposition to Proposition F (Learn more)

"We face unprecedented challenges as the COVID-19 pandemic ravages our city's health and economy, deepening disparities and pushing struggling families and businesses over the edge. That's why we need to pass Prop F, the Small Business and Economic Recovery Act, which will help jumpstart our economy, create a fairer business tax system, and provide new revenue for the critical city services we need to recover from this pandemic.", in support of Proposition F (Learn more)

"Proposition F is a length and complicated overhaul of existing City business taxes. While this may be a good idea in general, it is difficult to understand its impact on particular businesses right now and the city as a whole. I'm not at all convinced that changing complicated tax rates is needed during a pandemic.", in opposition to Proposition F (Learn more)

"By eliminating the payroll tax, Proposition F encourages businesses to hire again. By exempting small businesses from certain taxes, Proposition F provides those businesses an opportunity to regain their footing and avoid closure. By providing tax relief to retail, restaurants, the arts and manufacturing, Proposition F helps rebuild the sectors hardest hit by the COVID-19 pandemic.", in support of Proposition F (Learn more)

"Proposition F will release $433M in ECE dollars to go directly to support and improve access to quality childcare and education for children ages 0-5 in SF, and increase compensation of ECE professionals, most of whom are women, and women of color. ECE educators play a critical role in supporting families and educating our youngest children during the most crucial years of their life.", in support of Proposition F (Learn more)

"This is a massive tax increase of approximately $97 million annually. It also allows the immediate spending of an additional $1.5 billion dollars that the courts have impounded, as a result of the tax being collected illegally.", in opposition to Proposition F (Learn more)

Measure Details