Vancouver business owners, leaders concerned with upcoming tax increases

The Vancouver City Council approved the $1.7 billion 2023-2024 biennial budget, which includes increases to the city’s business license fee and surcharge

Courtesy of City of Vancouver

During the Nov. 21 Vancouver City Council meeting, numerous business leaders and business owners spoke out regarding concerns with an update to Vancouver’s business license fee and surcharge that was proposed in the city’s $1.7 billion 2023-2024 biennial budget.

According to a news release from city of Vancouver, the budget was built around the city’s universal policy themes of safety, equity and climate action, and includes $1.37 billion in the operating budget and $0.37 billion in the capital budget.

The update to the business license fee and surcharge – which would increase the city’s per-employee surcharge gradually from $105 annually to $245 annually by 2030 – was approved as a part of the city’s budget that was approved by council members Nov. 21. This increase equates to about $20 per full-time equivalent employee per year.

Council members Bart Hansen and Sarah Fox voted against the business fee and surcharge increase.

Several leaders in the business community and business owners voiced their concerns about the tax increases during a public hearing at the Nov. 21 city council meeting. Nick Massie, who works for Rotschy, Inc. and sits on the Southwest Washington Contractors Association Advisory Board, said that he feels that the increases are “a little too much, too fast.” He brought up concerns about how the city looks at 40-hour work weeks versus 32-hour work weeks in terms of full-time equivalent employees and said that he discovered there wasn’t really a distinction between part-time and full-time employees in regards to the employee surcharge.

Ron Arp, president of Identity Clark County (ICC), also spoke out during the Nov. 21 meeting. Arp referenced the fact that many business leaders and owners had supported the city’s initial thoughts and ideas that came about through Stronger Vancouver, and that many of them were early proponents of the Stronger Vancouver effort.

“Regrettably, we have slipped backwards into a piecemeal approach,” Arp said. “The tax load on residents and businesses is significantly higher and larger than the Stronger Vancouver Executive Services Council was recommending.”

Specific to the business license fee and surcharge reform, Arp said that Stronger Vancouver had initially recommended modest incremental steps in the employee head tax over the 2020s.

“Nowhere was it imagined there would be a 45% increase in first-year taxes and increases totaling over 250% across the 2020s for most commercial enterprises,” Arp said. “And this schedule being proposed while many businesses are barely squeaking by after the pandemic and on top of challenges from inflation, supply chain issues and a collection of regulations from Olympia.”

Arp said that ICC commissioned a poll to ask local businesses about the business license fee and surcharge increases and that they heard from 133 businesses of all sizes and across a variety of sectors within two business days. Of those business executives that were polled, Arp said more than two-thirds were unaware of the proposed tax increases.

Tamara Fuller, senior vice president at Capacity Commercial Group, LLC, addressed the council members and said that her concern was that was being proposed in the city’s budget is sending the wrong message to companies who may be evaluating moving their business to the Vancouver area from Portland or other areas.

“Developments here can only be successful if the developers are successful,” Fuller said. “We need to get people to look at Vancouver as an option in the region. We now have companies expanding outside of Portland, expanding into Vancouver. With what you’re proposing, the message is negative. These companies are going to re-evaluate looking at the area.”

Mark Matthias, owner of Beaches Restaurant & Bar, told council members that he was very surprised that these business license fee and surcharge increases came out at all, especially after the pandemic and after everything that business owners have went through.

“As much as I like working with you guys, sometimes I feel like there’s a real disconnect in what is really going on in business,” Matthias said. “We need to make sure that our whole community can live here and stop this illusion that just the businesses are going to pay for it. That’s not how it works. We should run this a little more like a business. I believe this will disproportionately affect our low-income residents.”

The business license surcharge fee will go into effect April 1, 2023.

Joanna Yorke is the managing editor of the Vancouver Business Journal. She has worked in the journalism field since 2010 after graduating from the Edward R. Murrow College of Communication at Washington State University in Pullman. Yorke worked at The Reflector Newspaper in Battle Ground for six years and then worked at and helped start ClarkCountyToday.com.

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