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Rocklin Cuts Business License Tax

The Rocklin City Council approved reductions to the City's business license tax structure that caps the cost of a business license at $125. The reduced cost of doing business in Rocklin means business owners can instead invest those dollars in to their operations.

The City Council's action Tuesday night is the third year in a four-year effort to reduce the business license tax rate in Rocklin.  The current business license tax structure varies depending on the type of business applying.  The tax for many business types is determined using a formula based on annual gross receipts.   The formula previously had no cap and resulted in very high annual business taxes for some of the City's largest employers and those with high-value products.

"Our business community raised concerns that our business license tax put Rocklin at a disadvantage and we listened," said Rocklin Mayor, Scott Yuill.  "Although reducing our business license tax rate meant a reduction in City revenue, the Council felt in the long run, this would be offset by additional revenue generated through the attraction of more and larger businesses."

To help mitigate the impact to the City's budget, the Council directed staff to phase the reductions over four years.  In 2012, the first year of reductions, the cap was set at $100,000.  In 2013, it was reduced to $3,000.  Council's latest action reduces the maximum businesses pay to $125 annually.  Many businesses may pay even less.  The only exception to the $125 cap is rentals or hotels that are taxed on a per unit basis. Because the change to the business license tax is an ordinance amendment, it requires a second hearing before Council.  The new reduced rate is expected to take effect on June 27, 2014.

Council also directed staff to return next year with additional recommendations to achieve the goal set in 2012 of creating a reduced and simplified flat tax for all businesses.   "We now have one of the lowest business license tax rates in the region, but there's more we can do to make sure businesses know they are valued here in Rocklin," said Yuill.  "In addition to fee reductions, we want to simplify the process so that determining the correct fee and applying for or renewing a business license is quick and easy."

The change to the City's Business License Tax also fulfills an objective adopted by Council in the City's Strategic Plan and Community Investment Plan.

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