SAN FRANCISCO (KCBS)—San Francisco’s new gross receipts tax, which voters decided to replace the former payroll tax, is going to cost millions of dollars to implement, city officials said.

Last November, over 70 percent voters supported the passage of Prop. E—a measure to replace the payroll tax system based on gross receipts — that was purported to bring $28.6 million in additional revenue to the city. The transition, however, will be complicated and costly.

KCBS’ Barbara Taylor Reports:

The new payroll tax has eight schedules, each with four different rates. Greg Kato, spokesman for the Treasurer and Tax Collector’s Office said this complexity will require the city to spend $2.5 million this year alone for five new staff members and new data technology to phase out the old system and administrate the new one.

“They will report in different categories and are actually required to and we will have to know much more about them,” he said.

“And their payroll expense will need to be reported still for the tax and also, in most cases, in how they allocate in San Francisco versus out of San Francisco taxes.”

Twenty thousand businesses—twice as many as the current system—will pay the new gross receipts tax. In addition, the new business license has 13 different fee schedules and all businesses will pay more.

The phasing out of the payroll tax is expected to start in 2014 and be completed in 2018.

(Copyright 2012 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)


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