Business License Tax

FY 2021-23 Adopted Policy Budget

The Business License Tax (BLT) is charged annually to Oakland businesses based either on gross receipts (accounts for approximately 60% of business license tax revenue) or rental income (40% of revenue). The rate on gross receipts varies by type of business, ranging currently from a low of $0.60 per $1,000 of receipts for grocers, to $6 per $1,000 of receipts for public utilities. The rate on rental income is $13.95 per $1,000.

BLT has been a relatively steady and reliable revenue source for the City, as shown below. However, BLT (like sales tax) is impacted by the health of the economy. During the COVID-19 pandemic, revenue from several classes of businesses was affected, including retail and wholesale sales, personal services, recreation/entertainment, and residential and commercial rentals. For many of these businesses, pandemic related economic effects may linger even as the economy gradually recovers, and consumers resume more normal economic activity. The most significant ongoing effects of the pandemic are likely to be in the commercial and residential rental sectors. Both commercial and residential real estate have experienced increased vacancies and declines in rental rates, resulting in reduced gross receipts. New construction activity is also expected to slow in response to heightened uncertainty about the prospects for commercial and multifamily residential real estate in the near term.

Business License Tax is expected to grow from an estimated $88.0 million in FY 2020-21 to $94.31 million in FY 2022-23. This is an average annual increase of 3.58% over the estimated $88.0 million in FY 2020-21. During the forecast period, retail and wholesale trade related activities are expected increase as consumers resume in-person shopping and personal income growth accelerates. In addition, residential and commercial vacancies are expected to decline and rental rates to increase. Although tax rates have been reduced on cannabis businesses, revenue is not expected to decline significantly, as sales increases and the transition to a legal cannabis market continue. Furthermore, the forecast does not include any proposed changes that are under consideration for a possible ballot measure in the 2022 General Election.