Committee contemplates changes to business license rates

  • Friday, February 7, 2014

The Town Business License Rates Committee met Tuesday to discuss three possible changes in rates to encourage multi-million dollar businesses to settle in Summerville.

Committee members discussed changing the license rates after noting Summerville’s rates differ from other area municipalities.

They charged Finance Director Belinda Harper with estimating the financial effects of changing the rates to be more similar to area competition.

Business license costs are determined based on a business’ class, which is nationally standardized, and its gross receipts.

For each class, a business is charged a base rate for $0 – $2,000 worth of gross receipts. If the receipts exceed $2,000 they are charged an additional smaller rate per extra thousand.

Under the current ordinance, businesses receive a discount on the rates after reaching $2 million in gross receipts. The declining rates are 95 percent for $2-3 million; 90 percent for $3 – 4 million; 85 percent for $4 – 5 million; and 80 percent for more than $5 million.

Harper presented the committee with specifics regarding three potential changes in the rates the members discussed at the last meeting.

The first option would not change the discount starting point, but would adjust the discount increments to 10 percent.

The second option reduces the starting point to $1 million and keeps the discount increments at 5 percent. The third option reduces both terms, to $1 million and 10 percent.

Using current business license income statistics, Harper estimated the plans would reduce the town’s income by $113,946, $32,031, and $259,174, respectively.

All monies collected for business licenses are used in the Town’s general fund.

Of all the options, including making no changes, the third option is most similar to other municipalities.

“The best way to encourage growth is to put us on par with everyone else,” said committee member Brad Mallet.

Several members had differing opinions on how to move forward.

“I wouldn’t do it all at once, I’d like to reduce it to $1 million and keep the 5 percent the same, and then reevaluate,” said Charlie Cuzzell. “I’m looking at throwing a rock in the pond and seeing where the waves go.”

Committee chairman Ronnie Givens said he would rather “do it all at once” to see the effects sooner.

The committee also discussed changing the rate decline for specific business classes only, in order to encourage certain types of businesses.

The group dispersed with a request for more specific details on the classes; they asked Harper to return with figures on the top 5 percent of revenue earners in each business class, and the number of businesses that contribute to that percentage.

The next meeting date is to be determined.

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