A plan moving through the state legislature could cost City of Charlotte coffers $8.5 million in local business taxes.
State lawmakers are considering a change to the tax a city can levy on most businesses within it, called the privilege tax. Right now, cities can generally determine how—and how much—they charge businesses, with some restrictions. Charlotte charges a percentage of gross receipts, up to $10,000.
But a proposal to replace the tax with a flat $100 fee for most businesses won approval in a state legislative committee last week. If it becomes law, city manager Ron Carlee told the Charlotte city council they will have a decision to make.
“The city council would need to consider either a tax rate increase or a significant reduction in services,” Carlee said.
The change would cut city revenue from the tax in half, from over $17 million to about $9 million, or about 1.5 percent of the budget, according to the state’s Fiscal Research Division.
Carlee says that equates to about one cent on the property tax, or would most likely mean city layoffs. At its meeting tonight, the council is scheduled to vote to ask lawmakers to leave the tax in place.