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On Monday, the Redwood City Council voted unanimously to place a business license tax modernization measure on the November ballot.
According to the city, the measure aims to ease the tax burden on small businesses while generating around $7 million annually for city services.
City Manager Melissa Stevenson Diaz said on Monday that the current business license structure is outdated, causing small businesses to pay disproportionately higher rates than larger businesses.
The proposed measure would address the imbalance by ensuring large businesses pay their fair share. If approved by voters, the measure will provide additional funding for essential city services such as police, fire, paramedic services, parks, recreation, community services, and libraries.
Small businesses, which make up 70% of Redwood City’s business community, will benefit from reduced tax rates, while larger businesses will pay more, up to $250 per employee. The annual payment cap will be raised to $250,000, aligning with similar cities. The measure includes a two-year phase-in period starting July 2025 and offers specific provisions to support small businesses, exempt childcare providers, and maintain current housing taxes.
In addition to generating approximately $7.2 million in new revenue for the general fund, which supports various city services, the measure ensures funds remain under local control and are dedicated to city programs and services. Regular reports will be made to the City Council to monitor impacts and trends.
