Cap on local business tax could cost city

Legislators are in the process of evaluating state Sen. Greg Steube’s proposal to cap local business taxes, but city officials have already rendered their verdict on the regulations.

“It would be very detrimental if this bill passes,” said Tim Litchet, Sarasota’s director of neighborhood and development services.

On Jan. 10, Steube filed State Bill 330, which would prohibit cities from charging businesses more than $25 annually in local business taxes. In 2016, the city collected $939,598 in local business taxes. If the $25 limit were in place, the city would have collected $145,800 — a decrease of $793,798.

City staff said the typical business tax bill is about $75, but the cost can range from $15 to $1,500 depending on the size of the business. The money goes toward the city’s general fund, but Litchet said the information gathered also helps the city keep track of the businesses operating within its boundaries.

“That’s where we make sure they have a lot of the licensing they need,” he said. “I think it gives the city and everybody a lot of good information.”

“I think it gives the city and everybody a lot of good information.” — Tim Litchet

Steube’s proposal received negative feedback at a January meeting of the ManaSota League of Cities. Officials on Longboat Key have also expressed concern about the potential effect of the bill. In Sarasota County, local business tax funds are used for economic development, with some of the money steered toward the Economic Development Corp. of Sarasota County.

Steube, who was elected to the District 23 seat in the state Senate after serving six years in the state House of Representatives, did not respond to requests for comment.

Litchet said similar efforts to cap the local business tax have been raised in the Legislature in the past. Already, the state limits the rate at which municipalities are allowed to raise the business tax rate. Litchet said it’s likely the ManaSota League of Cities will handle lobbying efforts against the proposed bill.

Although the proposal would lighten the financial burden on business owners in Sarasota, Litchet said he hasn’t heard much pushback to the business tax on a local level.

“I’ll be honest — in my opinion, it’s one of the least controversial things I do,” Litchet said.