COLUMBIA — The Columbia City Council voted to repeal a special tax Tuesday night that downtown businesses have been paying for years.
The tax, which generated about $20,000 per year, is being repealed as part of the transition in downtown governance from the Special Business District to the new Downtown Community Improvement District.
Carrie Gartner, executive director of the improvement district, said the repeal of the tax also is intended to relieve some of the financial burden on downtown businesses.
"With the repeal of this tax, we're trying to keep from nickel-and-dime-ing our guys," Gartner said. "If you're a small business owner, there are a bunch of little things you have to pay for. Those little things add up and can all-together become a hassle."
The tax had been assessed as an extra charge on business licenses for downtown shop owners. It tacked on an extra 50 percent of the license fee paid by all businesses in the city based on annual earnings.
Gartner said keeping the extra license tax doesn't make sense, given that it raises such a small amount of money.
"If we're trying to recruit new businesses, why would we make them pay more?" she said.
After paying the tax for 24 years, Cool Stuff owner Arnie Fagan deemed the tax "just another nuisance" and is glad to see it go.
"I had no choice but to pay it. You either pay it, or you don't have a (business) license. It was just money out of our pocket and out of our business," Fagan said. "So many new taxes have been levied on downtown businesses that any little bit helps."
The Downtown Community Improvement District has other sources of revenue, including a tax paid by the owners of property within the district. And beginning on April 1, it will collect an extra half-cent sales tax on all downtown purchases. That tax was approved by 25 downtown voters in November.
The extra sales tax is expected to generate $300,000 annually for improvement district projects.
Attorney Skip Walther is a 16-year member of the Special Business District Board of Directors and also serves on the improvement district board. He noted that the latter group is prohibited from charging the extra business license tax because of language in the petition that led to the formation of the new district.
"The tax was one of the few ways the SBD was funded," Walther said. "The SBD essentially doesn't exist, therefore the funding mechanisms don't need to be in place."
Walther said the tax wasn’t significant and that its termination won’t necessarily attract any new shops.
Gartner, however, remains hopeful.
"We've eliminated the hassle of the tax for current businesses; we've eliminated one obstacle for businesses wanting to relocate downtown."