San Francisco, California, Proposition F, Business and Tax Regulations Code Charter Amendment (November 2020)
| San Francisco Proposition F | |
|---|---|
 | |
| Election date November 3, 2020 | |
| Topic Local business regulation and Local charter amendments | |
Status Approved | |
| Type Referral | Origin Lawmakers |
San Francisco Proposition F was on the ballot as a referral in San Francisco on November 3, 2020. It was approved.
A “yes” vote supported amending the Business and Tax Regulations Code of the city charter to eliminate the payroll expense tax, increase the business registration fee by $230-460, increase gross receipts tax rates to 0.015-1.040%, increase the administrative office tax rate to 1.61%, increase gross receipts tax rates by 0.175-0.690% and the administrative office tax rate by 1.5% pending certain lawsuits, place a 1-3.5% tax on gross receipts from commercial leases, as well as other business tax changes. This also supported maintaining baseline funding for the Municipal Transportation Fund, the Park, Recreation, and Open Space Fund, the Children and Youth Fund, the Library Preservation Fund, the Housing Trust Fund, the Public Education Enrichment Fund, the Dignity Fund, and the Street Tree Maintenance Fund, regardless of changes to business taxes being voted on at the November 3, 2020 election. |
A “no” vote opposed amending the Business and Tax Regulations Code of the city charter to eliminate the payroll expense tax, increase the business registration fee by $230-460, increase gross receipts tax rates to 0.015-1.040%, increase the administrative office tax rate to 1.61%, increase gross receipts tax rates by 0.175-0.690% and the administrative office tax rate by 1.5% pending certain lawsuits, place a 1-3.5% tax on gross receipts from commercial leases, as well as other business tax changes. This also opposed maintaining baseline funding for the Municipal Transportation Fund, the Park, Recreation, and Open Space Fund, the Children and Youth Fund, the Library Preservation Fund, the Housing Trust Fund, the Public Education Enrichment Fund, the Dignity Fund, and the Street Tree Maintenance Fund, regardless of changes to business taxes being voted on at the November 3, 2020 election. |
A simple majority was required for the approval of Proposition F.
Election results
|
San Francisco Proposition F |
||||
|---|---|---|---|---|
| Result | Votes | Percentage | ||
|
|
273,953 | 67.48% | ||
| No | 132,024 | 32.52% | ||
-
- Results are officially certified.
- Source
Text of measure
Ballot question
The ballot question was as follows:[1]
| “ | Shall the City eliminate the payroll expense tax; permanently increase the registration fee for some businesses by $230–460, decreasing it for others; permanently increase gross receipts tax rates to 0.105–1.040%, exempting more small businesses; permanently increase the administrative office tax rate to 1.61%; if the City loses certain lawsuits, increase gross receipts tax rates on some businesses by 0.175–0.690% and the administrative office tax rate by 1.5%, and place a new 1% or 3.5% tax on gross receipts from commercial leases, for 20 years; and make other business tax changes; for estimated annual revenue of $97 million?[2] | ” |
Ballot simplification digest
The following summary of the measure was prepared by the office of the Ballot Simplification Committee:
| “ | The Way It Is Now: The City collects taxes from San Francisco businesses, including:
• The payroll expense tax; • The gross receipts tax; • The administrative office tax; • The annual business registration fee; • The early care and education commercial rents tax (Child Care Tax); and • The homelessness gross receipts tax (Homelessness Tax). The Child Care and Homelessness Taxes have been challenged in court, and the money collected through these taxes has not been spent by the City. State law limits the amount of revenue, including tax revenue, the City can spend each year. State law authorizes San Francisco voters to approve increases to this limit to last for four years. The Proposal: Proposition F would change certain taxes the City collects from San Francisco businesses, including: • Eliminate the payroll expense tax; • Increase the gross receipts tax rate in phases, expand the small business exemption and eliminate the credit for businesses that pay a similar tax elsewhere; • Increase the administrative office tax rate in phases; and • Change the business registration fee. Some of the changes to the gross receipts and administrative office tax rates would be delayed if a minimum of total San Francisco gross receipts are not met. Under Proposition F other changes would take effect only if certain conditions are met: • If the City loses the Child Care Tax lawsuit, the City would be required to collect a new tax on gross receipts from the lease of certain commercial spaces; • If the City loses the Homelessness Tax lawsuit, gross receipts and administrative office tax rates would increase for certain businesses; and • If the City loses either lawsuit, the City Charter would be amended to change how baseline funding is calculated. Proposition F would increase the City’s spending limit for four years. A 'YES' Vote Means: If you vote 'yes,' you want to: • Eliminate the City’s payroll expense tax; • Increase gross receipts and administrative office tax rates in phases; • Reduce business taxes for some small businesses; and • Further increase the City’s business taxes if the City loses either of the lawsuits regarding the Early Care and Education Commercial Rents Tax or the Homelessness Gross Receipts Tax, but exclude money collected from these increases when determining baseline funding. A 'NO' Vote Means: If you vote 'no,' you do not want to make these changes.[2] |
” |
Full text
The full text of the measure is available here.
Support
Supporters
- San Francisco Mayor London Breed[1]
- San Francisco Board of Supervisors[1]
- San Francisco Democratic Party[1]
- Children's Council of San Francisco[1]
- San Francisco Council of Community Housing Organizations[1]
- San Francisco Human Services Network[1]
- Wild Equity Institute[1]
- Glide Foundation[1]
- St. Anthony Foundation[1]
- Coalition on Homelessness[1]
- Larkin Street Youth Services[1]
- Coalition For San Francisco Neighborhoods[1]
- League Of Women Voters Of San Francisco[3]
- San Francisco Deputy Sheriffs’ Association[3]
- San Francisco League Of Conservation Voters[3]
- San Francisco Women's Political Committee[3]
- Sierra Club (California)[3]
Official arguments
The official arguments in support of Proposition F were authored by San Francisco Mayor London Breed and the San Francisco Board of Supervisors:[1]
| “ |
Vote Yes on Prop F, the Small Business & Economic Recovery Act! 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 & 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. Prop F also unlocks over $700 million, which is currently sitting in an untapped fund even though voters already approved it for early care and education, homelessness and essential city services. We need to pass Prop F now more than ever, which is why it’s supported by the Mayor, the entire Board of Supervisors, and a broad coalition including labor, small business and community organizations. Prop F will:
Prop F immediately helps struggling small businesses and working families while creating the investment we need for a fair recovery and a stronger, more equitable economy for our future. Vote YES on Prop F, the Small Business & Economic Recovery Act![2] |
” |
Opposition
Opponents
Official arguments
The official arguments in opposition to Proposition F were authored by David Pilpel:[1]
| “ | Please vote NO on Proposition F.
Proposition F is a lengthy 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. I respectfully suggest that Proposition F is not the solution that we need at this time. I also take issue with this ballot measure as a combined charter amendment and ordinance. While the two parts may be closely related, in my opinion they should have been two separate measures, perhaps with language only allowing each one to take effect if both of them passed. Mixing a charter change with an ordinance is not a best practice and it should not be rewarded with your support. Please vote NO on Proposition F. Thank you.[2] |
” |
Media editorials
- See also: 2020 ballot measure media endorsements
Ballotpedia identified the following media editorial boards as taking positions on the ballot measure. If you are aware of a media editorial board position that is not listed below, please email the editorial link to editor@ballotpedia.org.
Support
- San Francisco Chronicle: “This measure continues the years-long move away from a payroll tax, which discourages hiring, to gross receipts, a truer measure of business size. It comes with an extra message. Unless it passes, the city’s looming $1.5 billion shortfall will get a lot worse. It’s also a compromise that settles both legal and political fighting over tax reform. It protects small businesses at a time when the pandemic is closing doors and cutting jobs. While taxes for larger enterprises will go up, the rates will be broadly alike across the city’s business world and phased in over several years. Politics rarely produces sensible tax rules, preferring to confer concessions on favorites or sticking the bills with foes. This measure is the rare exception that spreads the bill equally and more fairly. Provided the financial world revives, San Francisco stands to benefit. Vote Yes.”[4]
- San Francisco Bay Guardian: “Everyone at City Hall has agreed for some time that the current business-tax system needed reform. In particularly, the tech industry has been getting a break at the expense of everyone else. Mayor Breed’s proposal was to shift around the burden but not bring any new revenue; the supes pushed back, and this non-consensus plan would add $100 million a year to the city treasury. It’s not a perfect tax system, but it’s a little better than what we have now, so we will support Prop. F."[5]
- Bay Area Reporter: "It would provide tax relief for sectors affected by COVID, including retail, restaurants, the arts, and manufacturing. It would eliminate the payroll tax and fully transition to the more equitable business tax system. It would increase the small business exemption ceiling for the gross receipts tax to $2 million. Other benefits include making available over $700 million for child care and early education, homelessness, and other essential services. This has support from the mayor and the board. Vote YES on Prop F."[6]
Opposition
Ballotpedia had not identified media editorial boards in opposition to the ballot measure.
Background
Gross receipts tax rates in San Francisco by industry
The existing gross receipts tax rates and the proposed rate changes from 2021 to 2024 are listed in the following chart by industry:[7]
| Industry | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Wholesale Trade | 0.075% to 0.160% | 0.105% to 0.224% | 0.105% to 0.224% | 0.105% to 0.224% | 0.105% to 0.224% |
| Manufacturing | 0.125% to 0.475% | 0.088% to 0.665% | 0.088% to 0.665% | 0.131% to 0.665% | 0.175% to 0.665% |
| Food Services | 0.125% to 0.475% | 0.088% to 0.665% | 0.088% to 0.665% | 0.131% to 0.665% | 0.175% to 0.665% |
| Transportation and Warehousing | 0.125% to 0.475% | 0.175% to 0.665% | 0.175% to 0.665% | 0.175% to 0.665% | 0.175% to 0.665% |
| Clean Technology | 0.125% to 0.475% | 0.175% to 0.665% | 0.175% to 0.665% | 0.175% to 0.665% | 0.175% to 0.665% |
| Biotechnology*[8] | 0.125% to 0.475% | 0.125% to 0.475% | 0.181% to 0.689% | 0.181% to 0.689% | 0.194% to 0.736% |
| Information* | 0.125% to 0.475% | 0.560% to 0.784% | 0.573% to 0.832% | 0.579% to 0.855% | 0.585% to 0.879% |
| Accommodations | 0.300% to 0.400% | 0.210% to 0.560% | 0.210% to 0.560% | 0.315% to 0.560% | 0.420% to 0.560% |
| Arts, Entertainment and Recreation | 0.300% to 0.400% | 0.210% to 0.560% | 0.210% to 0.560% | 0.315% to 0.560% | 0.420% to 0.560% |
| Utilities* | 0.300% to 0.400% | 0.210% to 0.560% | 0.435% to 0.580% | 0.450% to 0.600% | 0.465% to 0.620% |
| Private Education and Health Services* | 0.525% to 0.650% | 0.735% to 0.910% | 0.761% to 0.943% | 0.788% to 0.975% | 0.814% to 1.008% |
| Administrative and Supportive Services* | 0.525% to 0.650% | 0.735% to 0.910% | 0.761% to 0.943% | 0.788% to 0.975% | 0.814% to 1.008% |
| Miscellaneous Business Activities* | 0.525% to 0.650% | 0.735% to 0.910% | 0.788% to 0.975% | 0.814% to 1.008% | 0.840% to 1.040% |
| Construction | 0.300% to 0.400% | 0.420% to 0.630% | 0.420% to 0.630% | 0.420% to 0.630% | 0.420% to 0.630% |
| Insurance* | 0.400% to 0.560% | 0.560% to 0.784% | 0.580% to 0.812% | 0.600% to 0.840% | 0.620% to 0.868% |
| Financial Services* | 0.400% to 0.560% | 0.560% to 0.784% | 0.600% to 0.840% | 0.620% to 0.868% | 0.640% to 0.896% |
| Professional, Scientific and Technical Services* | 0.400% to 0.560% | 0.560% to 0.784% | 0.600% to 0.840% | 0.620% to 0.868% | 0.640% to 0.896% |
| Real Estate* | 0.285% to 0.300% | 0.399% to 0.420% | 0.413% to 0.435% | 0.428% to 0.450% | 0.442% to 0.465% |
| Rental and Leasing Services* | 0.285% to 0.300% | 0.399% to 0.420% | 0.413% to 0.435% | 0.428% to 0.450% | 0.442% to 0.465% |
San Francisco Proposition C (November 2018)
In November 2018, San Francisco decided Proposition C, which authorized the city and county of San Francisco to fund housing and homelessness services by taxing certain businesses at the following rates:
- 0.175% to 0.69% on gross receipts for businesses with over $50 million in gross annual receipts, or
- 1.5% of payroll expenses for certain businesses with over $1 billion in gross annual receipts and administrative offices in San Francisco.
It received 61 percent approval, and San Francisco city officials certified the measure as approved. A lawsuit was filed arguing that the measure required a two-thirds (66.67%) vote vote to pass. A superior court ruling sided with city officials and stated a simple majority was sufficient. It was appealed. As of October 2020, revenue from the measure was being collected but was frozen due to the litigation. Proposition F (2020) would enact a similar tax as Proposition C if it is overruled in court. Click here to read more about the post-election litigation.[9]
San Francisco Proposition C (June 2018)
In June 2018, San Francisco decided Proposition C, which authorized an additional tax on the lease of commercial property for landlords with annual gross receipts over $1 million. The measure was designed to levy a 1% gross receipts tax for warehouse space and 3.5% gross receipts tax for other commercial properties to fund childcare and early education programs.
It received 51 percent approval, and San Francisco city officials certified the measure as approved. The Howard Jarvis Taxpayers Association, the Building Owners and Managers Association of California, the California Business Properties Association, and the California Business Roundtable filed a lawsuit challenging Proposition C on August 3, 2018. The groups said that the proposition should have required a two-thirds (66.67 percent) supermajority vote for approval, stating that the measure was a special tax with funds designated to specific projects. San Francisco Superior Court Judge Ethan Schulman ruled on July 5, 2019, that two measures (both called Proposition C) on the San Francisco ballot in June and November of 2018 were properly certified as approved by city officials. It was appealed. As of October 2020, revenue from the measure was being collected but was frozen due to the litigation. Proposition F (2020) would enact a similar tax as Proposition C if it is overruled in court. Click here to read more about the post-election litigation.[9][10]
San Francisco Proposition E (2012)
In 2012, San Francisco voters approved Proposition E with 70.75%. The proposition phased out the city's payroll tax over a period of five years beginning in 2014 and replaced it with a gross receipts tax. In 2019, the revenue of the gross receipts tax had not fully replaced the revenue of the payroll tax.[9]
Path to the ballot
This measure was put on the ballot through a unanimous vote of the San Francisco Board of Supervisors on July 28, 2020.[1]
See also
External links
Footnotes
- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 San Francisco Elections Office, "Qualified Local and District Measures," accessed October 12, 2020
- ↑ 2.0 2.1 2.2 2.3 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 California Choices, "Ballot Endorsements," accessed October 20, 2020
- ↑ San Francisco Chronicle, “Editorial: San Francisco ballot recommendations cover taxes, housekeeping and social change.,” October 6, 2020
- ↑ San Francisco Bay Guardian, "Endorsements Fall 2020," October 1, 2020
- ↑ Bay Area Reporter, "Editorial: Vote yes on all SF props," September 23, 2020
- ↑ San Francisco Controller's Office, "Proposition F Economic Impact," accessed October 15, 2020
- ↑ Gross receipts tax rate increases may be delayed for industries noted with an asterisk if the city's total gross receipts do not meet certain thresholds.
- ↑ 9.0 9.1 9.2 SPUR, "Proposition F," accessed October 15, 2020
- ↑ San Francisco Examiner, "Business groups sue SF over universal childcare measure on June ballot," August 31, 2018
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