ALPHARETTA, Ga. — Alpharetta city leaders have begun a year-long study that could generate thousands of additional dollars in business fees each year.
At a Nov. 2 workshop, Alpharetta Finance Director Tom Harris presented a view of how the city assesses and collects taxes from its more than 3,600 businesses and how revenues compare to those in surrounding cities.
Georgia law allows local governments to impose an occupation tax on businesses that have one or more locations or offices inside their jurisdiction. This includes any building or vehicle where a business, profession or occupation is conducted.
The state allows several methods by which to apply a tax on commercial operations. Right now, Alpharetta generally assesses business taxes based on the number of employees. Other methods the state allows include basing the tax on gross receipts, profitability or a simple flat fee.
The City of Roswell is currently reviewing its business tax process which is based primarily on a business’s gross receipts and its number of employees. Roswell officials are exploring a different table by which to measure a business’s profitability, a move that could bring in more revenue.
There are caveats to any city’s application of a business tax.
Georgia law exempts insurance companies from occupation taxes. Instead, municipalities can assess insurance firms a licensing fee which is based on the city’s population. A city with a population of between 5,000-9,999, for example, is permitted to charge an insurance company an annual licensing fee of $50.
Alpharetta collects nearly $54,000 each year in licensing fees from the 537 insurance firms doing business in the city. However, Harris pointed out that because Alpharetta’s population exceeds 50,000, it could under state law raise the fee to $150 and collect an additional $26,000 each year. Right now, Alpharetta insurance firms pay $100 annually in licensing fees.
The city also collects some $4.3 million a year in a special tax based on gross receipts insurance companies receive on their premiums.
Insurance companies, though, are only part of the picture.
Financial institutions, like banks, also pay a special city tax assessed at one-quarter of 1 percent of their gross receipts. That tax brings in about half a million dollars a year to city coffers.
Most of the other 3,000 businesses operating in Alpharetta pay to operate through a tax based on the number of employees. In general, companies with from one to four employees pay a total of $100. Those with from five to ten employees pay $175. Those employing from 11-25 pay $300, and those with from 26-49 pay $50.
Companies with 50 or more employees pay a fee of $150, plus $7 per employee.
It has been 13 years since the formula for Alpharetta’s employee tax has been adjusted, and some City Council members say it’s time to look at revisions. They stress they are in no hurry to change anything until the economy stabilizes, however.
Most say the current employee-based business tax tends to penalize small operations disproportionately.
Councilman John Hipes pointed out that, under the current structure, a business with one employee pays $100, the same as a business with four employees.
“The way we have it currently structured, those that are the biggest pay the least per employee,” Hipes said. “So, the small businesses are carrying a more per capita [fee] than the bigger businesses.”