RETHINKING SAN DIEGO’S
BUSINESS LICENSE TAX
The Benefits of a Tax Amnesty and Holiday
Local government efforts to hasten enrollment in the City of San Diego’s business license
tax can be improved in a business-friendly way, fostering greater economic growth. A
more responsible and equitable method of generating greater government revenue would
be to improve compliance and reduce long-term administrative costs through temporary
tax amnesty and holiday initiatives.
* The City of San Diego’s business license tax collects a deminimis amount of revenue,
providing only $4.06 million (less than ½ of 1%) for a $1.1 billion General Fund budget.
* $1.3 million is collected in fines and penalties for the tax.
* Currently the City spends $1.5 million to collect and administer this tax.
* Current City efforts to enroll delinquent business are cumbersome and only modestly
* The experience of the cities of Anaheim and Los Angeles suggest that implementing a
100-day tax amnesty and holiday initiative will enroll taxpayers at a much lower cost to
the City and, over time, increase revenues to the City.
Introduction to San Diego’s Business License Tax
A business tax license is required of anyone conducting business activity within the city
of San Diego.1 As of December 31st, 2008, the City lists approximately 93,799 active and
inactive licensed businesses within its jurisdiction, of which small businesses (12 or
fewer employees) comprise 93.6% of all certificate holders.
Currently, the City of San Diego charges $34 for a business license tax for enterprises
with twelve employees or less, and $125 plus $5 per every employee for companies with
thirteen employees or more. Individuals seeking a license tax certificate must also pay an
additional $25 certificate processing fee, as well as an annual $15 renewal fee.
In Fiscal Year 2008 the tax provided only $6.1 million in revenue, with related penalties
and fees bringi