The City of Portland is at a 14-Year Low in Collecting Its Business License Tax

The city of Portland is at a 14-year low in collecting its business license tax, according to data provided by the city Revenue Division.

The amount of money collected has soared with the strong economy but the percentage of businesses actually paying the tax has declined.

"Compliance has fallen because the number of business license accounts has grown dramatically over the past several years," Revenue Director Thomas Lannom tells WW. "Business license accounts have grown by 52 percent over the past two-and-a-half years."

The city estimates that it's collecting taxes from 85 percent of businesses as of March 26, 2018, down from a high of 95 percent in March 2013.

The tax is on 2.2 percent of the net business income, though businesses making less than $50,000 are exempt. As of 2016-17 budget, the tax brought in $118 million and was the second largest of revenue to the general fund after property taxes.

The collection rate comes as the Revenue Division is requesting the budget to hire five new additional tax collectors

"This growth has spread our staff too thin to keep the compliance rate up," Lannom says.

The record low comes as Mayor Ted Wheeler has asked bureaus to cut expenses by 5 percent, even in the midst of an economic boom. Increased costs of wages, inflation and retirement benefits are partly to blame. The city also expanded its spending on housing and homelessness.

Update, 12:09 pm: The mayor's office is negotiating with the Portland Business Alliance over raising the business license tax, The Oregonian reported this morning.

PBA's Sandra McDonough declined to comment on negotiations, but had this to say about the collection rate: "We're not about protecting scofflaws," she tells WW. "The city should tell them to pay their taxes."