NATIONAL CITY, Calif. (KGTV) — National City leaders on Tuesday night voted against placing a controversial business tax measure on the November ballot, opting instead to spend the next two years refining the proposal after widespread opposition from the local business community.
The proposed measure would have asked voters to approve an increase to the city's business license tax — a gross receipts tax based on a business's total revenue rather than its profits.
City officials said the increase was needed to help address the city's estimated $13 million budget deficit and generate additional funding for public services, including public safety.
After several hours of public testimony on Tuesday night, the majority of the City Council voted against advancing the measure.
Business owners from a wide range of industries celebrated, after hours of public comment and debate.
"It's great. I think the City Council made the right decision," said Mike Thomas, vice president of ILWU Local 29. "We look forward to working with them in the future."
The proposal marked the first major overhaul of National City's business license tax in 47 years.
City leaders argued the tax structure has not kept pace with the city's growth or the increasing cost of providing services.
Opponents, however, said the process moved too quickly and did not provide businesses enough time to review the proposal. Much of the criticism centered on the release of the proposed ballot language, a 53-page document made public one day before Tuesday's vote.
"I think they're moving in the right direction, not to rush," said JoAnn Fields, API Initiative and PR director. "We know there's a deficit. There are other ways to cut the gap."
Ahead of Tuesday night's meeting, The San Diego County Taxpayers Association released the following statement in opposition to the tax:
The Association OPPOSES National City’s tax measure as there are major concerns about (1) the structural defects of gross receipts taxation—taxing revenue rather than profit, tax pyramiding, and disproportionate harm to low-margin businesses and start-ups; (2) National City’s already-high aggregate tax burden, and (3) the measure’s failure to meet the Association’s criteria or publish a revenue and sustainability analysis. The measure, as currently conceived, does not incorporate the Association’s accountability policies and oversight best practices and the City has not attempted to engage in our review process.
However, Supporters of the measure, including the National City Firefighters Association, argued the city needs additional revenue to maintain essential services as costs continue to rise.
Councilmembers Jose Rodriguez and Ditas Yamane supported placing the measure before voters, citing the urgency of the city's financial challenges. The remaining councilmembers sided with business owners, saying the proposal required additional public outreach and discussion before moving forward.
"We didn't know anything about this until two months ago," said Sherry Gogue, an executive board member with the National City Chamber of Commerce. "Everybody wants to help National City. We just have to make sure it's done right."
Rather than placing the measure on the November ballot, council directed staff to continue studying the proposal, expand public education and outreach, and explore the creation of advisory committees before potentially bringing a revised measure back to voters in 2028.
