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San Francisco Approves Tax for Homeless Services

by Scott Donald, Irvine, November 2018

 

San Francisco voters approved a new gross receipts tax on the November 6 ballot to fund homelessness services. Proposition C creates a gross receipts tax on companies with more than $50 million in sales. The rate varies based on industry, with an average rate of 0.5%.

 

This new tax is in addition to San Francisco’s existing gross receipts tax, which has rates between 0.16% and 0.65%.

 

Tax Rates by Business Type

 

Prior to the election, San Francisco's maximum business tax rates on gross receipts ranged from 0.16% to 0.65%. Proposition C will increase rates by an additional tax of between 0.175% and 0.69%, based on business activity type as outlined in the San Francisco Business and Tax Regulations Code. (See table below.)

 

Certain businesses with administrative offices in San Francisco, at least $1 billion in gross receipts, and at least 1,000 employees nationwide will be required to pay an annual homelessness administrative office tax (rather than a gross receipts tax) at a rate of 1.5 percent of payroll expenses.

 

Tax Revenue Allocations

 

Proposition C establishes the Our City, Our Home Fund, to be administered by the mayor and the board of supervisors and monitored by an advisory committee.

 

Tax revenues would be allocated in the following manner:

 

  • At least 50% to permanent housing through the Mayor's Office of Housing and Community Development (MOHCD)

  • At least 25% to mental health services for homeless individuals through the Department of Public Health

  • Up to 15% to homelessness prevention through MOHCD or the Department of Homelessness and Supportive Housing (HSH)

  • Up to 10% to short-term shelters through HSH

 

The San Francisco Controller estimates that tax revenues will total between $250 million and $300 million annually.

 

  Business Activity

Tax Increase

  Retail/Wholesale, Certain Services

0.175%

  Biotechnology, Clean Technology, Food Services,
  Information, Manufacturing, Transportation/Warehousing

0.500%

  Accommodations, Utilities, Arts/Entertainment/Recreation

0.425%

  Administrative/Support Services, Private Education/
  Health Services

0.690%

  Construction

0.475%

  Financial Services, Insurance, Professional/Scientific/
  Technical Services

0.600%

  Real Estate/Rental/Leasing Services

0.325%

 
Source: San Francisco Treasurer and Tax Collector