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May 17

Amazon Tax

I hope you all are doing well today. I’m writing to you today to give more information about the recent “Amazon Tax” referenced in local media outlets over the last few weeks and provide a brief overview of the initiative ordinance process. As of today, we can confirm that an Initiative Ordinance for the November 2022 election was submitted to the SF Department of Elections by John Elberling and Kaylah Williams. John Elberling is the President of Tenants and Owners Development Corp., known as TODCO. Kaylah Williams was the Campaign Manager for Chesa Boudin for District Attorney and Alison Collins for School Board. She is now Campaign Lead for the Association of Flight Attendants – CWA. The drafted initiative ordinance is still awaiting the official City Attorney title and summary. While we wait for more information to emerge, please see below for a detailed analysis of the ordinance’s goals. As always, please let me know if you have any questions.

Retail Fairness and Guaranteed Income Tax, also referred to as the “Amazon Tax” (Text here)

Overview

This measure would “ensure that the business activity of warehouse retailing or wholesaling over $2.5M would be subject to the same tax rate application to large-scale transportation and warehousing.” The proceeds from this tax would be used to support an income distribution program that provides individuals with what has been referred to as “guaranteed income” to cover basic living expenses. The identified goal of the guaranteed income program is to “prevent people from becoming poor or remaining in poverty, and consequently to promote a more just society.” Should this measure pass in the November 2022 election, the guaranteed income program would be established by City ordinance, and monies collected under this initiative would be deposited to the credit of a “Guaranteed Income Fund” (“The Fund”) that would be maintained separate and apart from all other City funds and will be subject to appropriation. Monies collected in this fund are earmarked for the creation and maintenance of a Guaranteed Income Program for San Francisco residents based on, but not limited to, the following considerations: combatting displacement, unemployment, domestic violence, housing insecurity, and more. The measure will also require that portions of the monies be used to create and support programs benefiting locally-owned small businesses and to support the City General Fund. Should this initiative ordinance pass at the November 2022 election, changes shall become effective on January 1, 2023.

Business and Tax Regulations Code Amendments

Business and Tax Regulations Codes amendments include the following: Adding Sections 953.7-1 through 953.7-4, and revising Sections 953, 953.1, and 953.9 of Article 12-A-1. For the purposes of this memo, we’ve focused on summarizing proposed Sections 953.7-1(Gross Receipts Tax [GRT] Applicable to Certain Business that Transport, Deliver, or Ship Goods to a Purchaser Within the City and County for Purchases Made Off-Premises) and Section 953.7-3 (Expenditure of Proceeds).

Section 952.7-1 – Gross Receipts Tax Applicable to Certain Business that Transport, Deliver, or Ship Goods to a Purchaser Within the City and County for Purchases Made Off-Premises

For persons or combined groups with total gross receipts over $2.5M, the gross receipts tax rate applicable to the business activity of “engaging in either retail trade or wholesale trade, that also involves transportation, delivering, or shipping goods to an address within the City will be that set forth for the business activities of transportation and warehousing for taxable gross receipts over $25M.” The gross receipts tax rate for business activities of transportation and warehousing for taxable gross receipts over $25M is 0.665% (e.g., $6.65 per $1,000). 

This measure would be inapplicable to:

  • Orders placed in-person at the premises of a business engaging in retail or wholesale trade. 
  • Gross receipts derived from the transportation, delivery, or shipment of food products, health products, products regulated by the California Department of Cannabis Control, products regulated by the California Public Utilities Commission, and medical products. 

Furthermore, for the purposes of calculating the Homelessness Gross Receipts Tax (Prop C), the tax rate applicable to the person or combined group’s taxable gross receipts in excess of $50M shall be the rate corresponding to Section 953.2. 

953.7-3 – Expenditure of Proceeds

The Fund will be maintained by the Controller’s Office. Money in the Guaranteed Income Fund shall be used exclusively for the purposes outlined below, and shall be appropriated on an annual or supplemental basis in the following way.

  • Refunds of any overpayments imposed by Section 953.7-1. Once refunds are made, the Fund would be further distributed as outlined below.
  • 15% to the General Fund, to be expended for any purposes of the City; 
  • 15% to funding (including administrative costs) the creation and support of programs supporting economic stability, civic economic benefit of locally-owned small businesses in San Francisco, to be established by the City ordinance; 
  • All remaining amounts to funding (including administrative costs) the creation and support of a program, to be established by City ordinance that provides guaranteed income to City residents based on considerations that may include but are not limited to Combating displacement, unemployment, domestic violence, structural inequities, financial insecurity, economic  disadvantage, income inequality, discrimination, and housing insecurity; 
    • Prior to considering the City ordinance described above, the City shall conduct a community engagement process to solicit feedback on drafting the ordinance. This community engagement process will include, at minimum, an opportunity to provide written recommendations, and will be made public on the City’s website.

Initiative Ordinance Process 

A proponent has a maximum of 180 days from the date of receipt of the City Attorney’s ballot title and summary to obtain all required signatures and file the petition with the Department. In order to qualify a measure for a specific election, a petition must be filed with the Department no later than 120 days prior to that election. In terms of signature requirements, the proponent must gather at least 8,979 valid signatures of registered San Francisco voters. A simple majority, or 50% of the total number of votes cast on the measure plus one, is required to adopt a Charter Amendment, Ordinance, or Declaration of Policy. 

Quick Reminder: If you have not had a chance, please reply to this email with additional team members who have joined your team and should be on our email distribution list.

Please let us know if you have any additional questions. As always, we will keep you updated with information as it comes our way. Thank you for your membership. 

Jen 

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