Commission raises occupational tax

The City of Maysville recently approved an increase to the occupational license tax.

According to the city, the ordinance increases the occupational license tax from 0.075 percent to 0.1 percent of gross receipts from business done within city limits.

This applies to work done or services performed or rendered in the city by every establishment doing business, effective July 1.

Commissioner Andrew Wood made a motion to approve the second reading of the ordinance amending the percentage of tax related to the occupational license. Commissioner Ann Brammer seconded the motion.

Brammer opened discussion on the topic.

“A business person brought this to my attention and I was remiss in thinking about it but since like, people have raised their prices in the stores and whatever, aren’t they already paying on that increase in gross receipts, what they raise of their prices? Say a business is paying $8 an hour and you’re raising their pay to $15 an hour and then their, their menus go up and whatever, aren’t they already paying on that raise of the gross receipts?” asked Brammer.

City of Maysville Comptroller Joseph Rodosta responded to Brammer.

“If they raise their prices to like $50 for a meal, they’re paying $15 versus $10 on gross receipts based on their total gross receipts. But if they choose to raise that, but if not every businesses raise prices or whatever. It’s just a compounding thing so yes, if the price for a loaf of bread increases, then that means that that business made more money on that bread and they would pay more. But that, that’s a hard thing to really say when you’re talking about bringing in more money,” he said.

Brammer then asked City Manager Matt Wallingford to explain Rodosta’s response in-depth.

“Well what happens there, Ann, is that it’s the vast majority of, this is an occupational license fee, again. It has nothing to do with the individuals who work there. So there’s, there’s no change on the payroll tax,” said Wallingford.

Brammer replied, “But if they increase their prices, that is being paid then at the increase for gross receipts, correct?”

Wallingford answered Brammer’s question.

“No, what happens is if they make more money and they get over essentially the threshold of $100,000 in gross receipts, which the vast majority of small businesses are not going to have and the vast majority of folks who pay an occupational license here will only pay the flat $100. Anything over $100,000 will pay the .1,” Wallingford said.

He continued, “If you have gross receipts in the amount of $200,000 you’ll pay $150 right now, no, you’ll pay $200. If your gross receipts are $300,000, your occupational license would be $300. But the vast majority, Ann, are going to pay the flat 100 because their gross receipts are less than $100,000.”

Brammer then asked how this occupational tax would affect grocery stores.

According to Rodosta, larger corporations will likely be “hit” harder than other businesses. He added that larger stores, such as Kroger or Walmart, also do a “ton more volume” than any other business.

Wallingford agreed with Rodosta.

“Your larger corporations are going to pay more versus your small businesses,” said Wallingford.

Prior to this increase, local businesses in the area would pay $75 a year but will now pay $100 a year, a flat minimum, according to Wallingford.

Gwendolyn Boone, a resident of Maysville, shared some concerns regarding how this might affect small businesses.

Boone recalled a comment that was made in an earlier meeting where it was stated that since the cost of utilities was going up, it made sense that taxes would go up as well.

She said taxes are a percentage of the money already being spent, so taxes are increasing regardless of the tax change.

Wallingford said the city’s numbers were not showing that increase.

“So I get it, this tax is going after our small businesses, it’s not going after the big corporations,” said Boone.

Wallingford responded, saying the tax increase will affect everybody.

“It affects everybody,” said Wallingford.

Boone responded to Wallingford’s comment.

“It affects everybody but the big corporations making more than $100,000 were going to pay an increased rate anyway. It’s the small businesses that are barely scraping by that, that they’re going to see the increase hit the hardest because they’re not making more than $100,000 a year,” said Boone.

Wallingford responded again.

“They’ll pay 25 extra dollars a year. That’s what they would pay. Instead of $75, they’ll pay $100, would be the flat minimum,” explained Wallingford.

Boone asked if the amount paid was going up for the businesses.

“So it’s going up for them?” asked Boone.

Wallingford responded.

“It goes up for everybody, it goes up across the board,” explained Wallingford.

Boone explained her thought process more.

“But we’re targeting them because it’s the people making 100,000 or more that are already going to be paying increased rates. Kroger’s raising their prices, Purple Llama is raising their prices, okay? Purple Llama is still going to be under $100,000, probably, I don’t know. But Kroger is definitely going to be way more than $100,000. So Kroger is going to pay, they’re seeing that increase just because their gross receipts are more. Now, Parish’s gross receipts aren’t enough to bump her over that $100,000 but we want to make sure that she still pays more. That’s what we’re doing,” said Boone.

Wallingford responded.

“Yeah, the minimum would be raised from $75 to $100. That’s the minimum,” answered Wallingford.

Boone responded again, questioning if small businesses would see the raise.

“I mean, Kroger is going to see the raise even if we keep it at .75 but Purple Llama is not unless we raise it. So we want to make sure that those small businesses feel that squeeze and get that little extra from them,” questioned Boone.

“But even if your example though, it’s not a guarantee, we’re going to get that much more money either,” said Rodosta.

“Excuse me, but our purpose here is not to hurt anyone and not to put a squeeze on anyone. Our purpose is to have the funds to have a fire department, a police department, have water and sewer, have public works and keep the city looking nice. And we’re just trying to balance the budget. This is not a target to anyone,” said Maysville Mayor Debra Cotterill.

“Okay, that’s fair, I’m just trying to understand,” said Boone.

Wallingford told Boone he would be “happy” to sit down with her and answer questions she might have in the future.

He said City Clerk Lisa Dunbar would send out letters to all businesses to notify them of the increase.

All votes were in favor of passing the second reading of the ordinance amendment.