City council reconsiders per capita, business privilege, mercantile taxes
With budget season for 2027 approaching, Butler City Council held a discussion on how it can ease taxes on both residents and businesses.
City council held a preliminary discussion during its Thursday, Oct. 8, meeting on eliminating the city’s per capita tax and raising exemptions for the city’s business privilege and mercantile taxes.
The per capita tax is a $10 flat annual tax on city residents. Business privilege and mercantile taxes are taxes on the amount of money a business generates, based on gross revenues.
Councilman Bill Painter spearheaded Thursday’s conversation, iterating a significant chunk of the per capita tax’s revenue was spent on collection of the tax.
“We’re looking at the minimum right now of about 37% of the revenue collected is going to collection costs for the per capita tax, based on how we are doing it with the county collecting it,” he said.
He said revenue figures are likely inflated through “aggressive collection” practices such as penalty fees.
Councilwoman Lisa Quebedeaux agreed with the elimination, calling it a “nuisance tax” more than anything else.
“The late fees for this is exorbitant. It’s absolutely insane how bad this can balloon to. I look at that $43,000. That’s a bit of money, but the negative impact it has on people who can’t afford that $90 is not a trade to me,” she said.
Mayor Bob Dandoy said he spoke to city chief financial officer Jason Ross, who called it ridiculous to pay such high penalties fees for collection. He also said he believes the proceeds from the Butler Area Sewer Authority sale and its interest makes it so the tax is not going to make or break the city’s finances.
“Because we structured the money wisely and judiciously, we are getting returns that we’re able to send forward to residents and say ‘here’s this small gesture we can take care of,’” he said.
While discussions originally circulated around suspending the tax, city solicitor Tom Breth said the city would either have to keep the tax ongoing or repeal it. If it were repealed, it cannot be reinstated.
Regarding mercantile tax, Painter suggested raising the exemption from the first $10,000 of revenue up to $50,000. For business privilege tax, he suggested passing on services, a $25,000 exemption on rentals and reducing the license fee for businesses generating $50,000 or less to $5 a year.
“Increasing the exemption was projected to cost $115,000 or approximately 8% of overall business collection. So the goal would be to give a broad-based tax reduction in business taxes without reducing the overall millage,” he said.
He said revenue loss could be offset by expanding enforcement on non-domiciled businesses, such as online storefronts or services from outside the city.
Dandoy said he thinks a reduction could help small businesses establish themselves in the city.
“In the first couple of years after a small business opens, that’s where the most impact is. They’re putting out money like crazy for buildouts and fees and getting everything set up. It’s a lot of money going out in the beginning, and we might be able to help them with that by doing this,” he said.
He said lowering these taxes could encourage businesses to come to the city, ultimately resulting in more tax revenue in the long term.
Questions were raised about whether the tax could benefit smaller businesses or certain types of businesses more, but Breth said any tax reduction would have to be universal.
Ultimately, council took no action Thursday as its members take time to consider the proposals while Breth reviews legal options.
