The numbers are in from the City of San Jose's experiment with tax-leniency, and the program appears to be a success.
Last year, the Department of Finance declared an "amnesty period" during which businesses operating in the city without a license could come forward and catch up on their local back-taxes, in most cases without being forced to pay penalties or interest. The city's tax code charges businesses a 25 percent penalty if they do not pay their taxes before opening their doors--50 percent if they do not pay within 30 days.
According to a report issued late last week, more than 6,600 businesses took part in the program, coughing up a total of $1,881,141. The city waved penalties and interest for 4,950 of those businesses, which paid a total of $1,551,445.
In addition to the influx of quick cash, the city also is counting on new annual revenues of $725,000 from existing businesses newly on the tax rolls. That was a nice surprise to the folks in Finance, who had forecasted that they would be receiving only $300,000 in new money each year after the program.
The amnesty period's success has inspired John Guthrie, the city's Director of Finance, to recommend that a grace period for new businesses be written into the business tax ordinance.
Guthrie sent a memo last Wednesday to the city council's Finance and Technology Committee saying the grace period could cost the city $110,000 per year, but that the loss would be offset by the new money generated by the amnesty.
Michelle McGurk of City Councilmember Frank Fiscalini's office says she would like to see the idea spread further--especially to the parking enforcement office.
"The amnesty period set up a very friendly way to do business with the city," McGurk said. "I think it would be a good thing for San Jose to look at offering amnesties for other things, like library fines or parking tickets."
She pointed out that the parking-ticket amnesty would definitely go over well with city employees, who must feed meters to park near city hall, and get lots of tickets.
Willow Glen, California Since 1992
