San Francisco, CA — Mayor London N. Breed and Board of Supervisors President Norman Yee today announced an agreement for reform to the Gross Receipts Tax that will include unlocking the funding from the June and November 2018 Propositions C that is currently tied up in litigation.

“I’m proud we’ve come together on a consensus measure that will reform our business taxes, release critical funding for homelessness and childcare, and add new revenue that will help support our city as we eventually emerge from his pandemic,” said Mayor Breed. “Our city faces incredible challenges in the coming months and years, but we’ve shown that when we work together we can make a difference for the future of San Francisco. I want to thank Board President Norman Yee and the other members of the Board, as well as our City Controller, who continued to work through this pandemic so we could move forward this consensus measure.”

“This unified measure cuts to the heart of what we need most right now: bold reform to our business tax structure and much needed relief for our struggling small businesses and working families,” said President Norman Yee. “I am grateful for the broad coalition of community advocates, labor, and small businesses, who worked closely with us to propose a balanced way to face our future economy.”

The agreement on Business Tax Reform will unlock revenue from the June and November 2018 Propositions C that is currently tied up in litigation by triggering a backstop tax to replace those taxes should the City lose lawsuits currently being heard in the courts. It will complete the phase out of the payroll tax in 2021 and replace it with a revenue-neutral gross receipts tax. The measure provides tax relief for small businesses and industries that have been heavily impacted by the COVID-19 pandemic, including restaurants, retail, manufacturing, arts organizations, and hotels. The measure phases in increases on certain white-collar industries as the economy recovers, generating additional revenue for City services

The measure will need to be voted on by the Board of Supervisors to be placed on the ballot, and then must be approved by the voters in the upcoming November election by a simple majority (50%+1).

“Contrary to some assertions that taxes are pro forma functions of government, they require a tremendous amount of work and diligent attention to detail in order to ensure equity and efficacy,” said Supervisor Aaron Peskin. “This measure is the culmination of months of long deliberations with our Controller and community stakeholders to right-size our business tax structure. It will generate millions of dollars for Muni recovery, street cleaning, homeless services, housing and childcare - all while ensuring small businesses receive significant relief.”

“It’s inspiring to know that in times of crisis we’re able to come together for real solutions to help San Francisco recover,” said Budget Chair and Supervisor Sandra Lee Fewer. “I am proud to stand with my colleagues and the Mayor to make sure the Small Business and Economic Recovery Act passes in November.”

“This measure will restructure our tax system to help us recover from this deep economic recession and invest in critical, essential services like mental health care and early education. Our small businesses are suffering right now, this will allow us to provide them with immediate tax relief. It’s a strong, balanced, equitable measure, and I’m proud of all of the work of my colleagues and partners to get us here,” said Supervisor Matt Haney.

Last year, Mayor Breed and Board President Yee asked the City Controller to convene a public process to create a more efficient tax system while also ensuring that the system is fair and equitable, including for small businesses. The effort also aimed to generate additional revenue to address homelessness and the cost of housing, support youth and families, improve behavioral health, and enhance the City’s public transportation system.

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