Aberdeen to Revisit Tax Policy for Businesses
By Tom Embrey
Aberdeen's Board of Commissioners will revisit its tax on a business' gross receipts following concerns from two companies worried that such a surcharge unfairly impacts wholesale businesses by taxing their merchandise twice.
Town Manager Bill Zell offered a possible solution last week in the form of a table or matrix for businesses that are wholesalers, manufacturers and distributors.
The solution calls for a flat fee of $200 for each business and an additional charge between $200 (50 or fewer employees) and $1,200 (more than 500 employees) based on the number of employees at the business. Thus, a qualifying business with 650 employees would pay $1,400 in tax.
"That sounds like a much more fair solution," said Frank McNeill, of McNeill Oil and Propane. In November, McNeill and Alan Moon of Aberdeen Coca-Cola Bottling Co. both voiced concerns over the fairness of a gross receipt tax on wholesale and distribution businesses.
Both said at the time that they had no problem paying their fair share, but they felt that because their businesses were wholesalers, the town was collecting tax on their merchandise more than one time.
"I just want us to be fair; not even, but fair," McNeill said during the November meeting. "We want to bring it to you that it's hitting a few of us pretty darn hard."
A gross receipts tax or gross excise tax is a tax on the total gross revenues of a company, regardless of their source. The gross receipts policy went into effect July 1, 2012.
Manufacturers, wholesalers and distributors, and other businesses in Aberdeen currently are charged a privilege license tax based on a percentage of all gross receipts over $500,000. Revenue under $500,000 is subject to a flat fee only.
All gross receipts over $500,000 are taxed at a rate of 50 cents per $1,000.
For example, a retailer with yearly gross receipts of $45 million would be liable for the flat privilege license tax of $50 on its first $500,000 of gross receipts, and a gross privilege license tax of $22,500 on the remaining $44.5 million.
In November, the board agreed to work on possible solutions and revisit the policy in January.
According to the current ordinance gross receipts will be the amount the business reports on its state income tax return, or on the federal return filed with the state return if the state return does not separately state gross receipts for the most recently completed tax year.
The ordinance also includes a flat fee for all businesses that ranges between $50 and $200.
In March, when he first presented the gross receipts tax idea to the council, Zell said he thought the change would increase the town revenue significantly. He said then that the town had been charging businesses "the minimum for years" and that the change in taxation was an "untapped" revenue source.
When implemented, the gross receipt tax was intended to collect more from larger or big box retailers.
Zell said this now was an opportunity to take a closer look at the policy.
"When people come to us with questions, you have to think about it, because when you make policy you can't always anticipate all the issues that may come up," Zell said.
Contact Tom Embrey at (910) 693-2484 or tembrey@ thepilot.com.
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