A Columbia City Council member wants the city to charge business license taxes to some nonprofit businesses, but council members say they have a lot of questions that need answers before they’ll consider a policy change.
In response to the city’s continued search for revenue sources, Councilman Moe Baddourah is proposing that nonprofit businesses that compete directly with for-profit businesses should be charged for business licenses. Charitable organizations are currently exempt from business license taxes.
“I’m really trying to find ways to generate revenue and make the system a little bit more fair when it comes to business license fees,” Baddourah said.
He noted specifically that operations run by hospital systems – such as physicians’ offices, gift shops, cafeterias, florists and laundry services – compete directly with for-profit businesses offering similar services.
Other council members agreed Baddourah’s proposal is worth considering as a potential way to bring in more revenue. But, they said, there are far too many gray areas and as-yet-unanswered questions to proceed quickly with any sort of policy decision.
For one, Mayor Steve Benjamin asked, what data is there to show the financial impact on the city if those currently exempt non-profit businesses were to start paying the tax? City staff does not yet have figures to show how much revenue the city could stand to gain.
Benjamin also expressed concern about what he anticipates to be a lack of support from hospital leaders as well as, he said, a need to consider the uncompensated services, such as treatment to homeless individuals, that hospitals provide before charging them a tax.
Another question raised by Councilwoman Tameika Isaac Devine is what other non-profits could be affected by the proposed change. Church-run daycares, for instance, are currently exempt from business license fees, but some could have to pay the tax if Baddourah’s ordinance amendment were adopted as drafted. Other entities such as the Salvation Army and Goodwill also could be affected.
Council has the flexibility to decide whether it would want to include businesses such as those in a policy change. But still, council members pointed out, those questions will take some time to answer.
“There’s been a lot of discussions around hospitals, but the hospitals are only one category under all of our business licenses,” Devine said. “And you can’t target the hospitals without dealing with other nonprofits if we decide to go this route.”
In recent years, Spartanburg and Greenwood have considered similar changes to their business license fee policies but instead worked out agreements to receive alternative payments from some nonprofits in lieu of taxes.
Baddourah, Devine and Councilman Sam Davis will serve on an ad hoc committee to continue to explore the issue.
Reach Ellis at (803) 771-8307.