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Council discusses BPOL changes
Businesses are charged a Business and Professional Occupancy License (BPOL) tax based on how much total revenue they bring in.
BPOL taxes are unpopular with business owners because they’re based on gross receipts rather than earnings.
The city brings in $5.3 million in revenue from the tax each year and if it went away, the revenue stream would need to be replaced.
It’s one of the five largest revenue sources for the city.
City Manager Beverly Cameron told the council that the BPOL tax brings in 7 percent of the city’s general fund.
To put it in context, that would basically cover the cost to operate and maintain the Fredericksburg Fire Department for a year.
Here’s how the BPOL tax structure is now:
- Businesses with less than $50,000 of gross receipts are currently taxed at a flat rate of $25
- Businesses with gross receipts between $50,000 and $200,000 are taxed $25 for the first $50,000 of gross receipts plus the rate set for the type of business
- Businesses with gross receipts more than $200,000 are taxed at the rate set for the type of business
And here are the rates for each type of business:
- Retail: 20 cents per $100
- Construction: 16 cents per $100
- Professional Services: 58 cents per $100
- Repair, personal, other services: 36 cents per $100
City staff came up with seven options with ways to revamp the BPOL tax. They are detailed in a staff memo here.
There were two options Cameron discussed in detail.
In the first, businesses with gross receipts under $200,000 would be taxed a $25 flat rate, and businesses making more would be taxed at the current rates.
There are 1,800 licensed businesses in the city. Under this option, 19 percent, or 341 would get relief, Cameron said. It would cost the city $100,000.
The median savings for each type of business would be: $132 for retail, $363 for professional service businesses and $180 for other types of businesses.
In a second option, businesses with gross receipts under $500,000 would be taxed a $25 flat rate, and businesses with more would be taxed at the current rates.
Under this option, 28 percent of businesses, or 504, would get relief. It would cost the city $459,000.
The median savings for each type of business would be: $414 for retail, $800 for professional services and $309 for other types of businesses.
BPOL is an ongoing issue in Fredericksburg and other localities around the state. There will likely be more discussion from the City Council and a public hearing/meeting/dialogue in the months to come to discuss potential changes and how they will impact businesses and residents.