Portland-area business owners are calling on the Oregon Legislature to defer a new $1 billion-per-year tax until the COVID-19 crisis is over.
The Corporate Activities Tax was approved by the 2019 session to increase public school funding via the Student Success Act. But a coalition of more than 30 regional business organizations say that many companies cannot now afford the .57% tax on most business transactions within the state.
Hundreds of businesses have closed and tens of thousands of workers have lost their jobs in the past few weeks, many as the result of social distancing restrictions imposed by Oregon Gov. Kate Brown.
Brown is expected to call a special session of the Legislature to begin addressing the crisis next week.
"Oregon employers are facing a cash flow crisis amid the COVID-19 pandemic," the coalition said in a recent letter to the Oregon Legislature. "The single quickest and most impactful way lawmakers can help alleviate the financial stress we are under is by delaying the implementation of the Corporate Activities Tax as soon as possible. We simply cannot afford this tax at a time when many of us are struggling just to figure out how we are going to make payroll and keep the lights on."
Members include Oregon Manufacturing and Commerce, Oregon Home Builders Association, Oregon Restaurant and Lodging Association and Oregon Business & Industry.
Three Portland area business owners called for the Legislature to defer the tax during a teleconference with reporters on Thursday, March 6.
"Sales are down one-third. It's just like a faucet has been turned off," said Chown Hardware owner David Chown, adding that he has just laid off 25 employees, one-quarter of his workforce.
Chown said his company's first-quarter tax payment is $30,000, which is equivalent to one month's salaries for eight to 10 employees.
"The tax is making me choose between paying the government and supporting families," Chown said.
"We are in a cash-flow crunch right now. Every dollar we can save is critical. The least we can do is delay the tax to give us a fighting chance," said Mark Bigej, fourth-generation family owner of Al's Garden & Home.
Jerry Scott, president & CEO of Elmer's Restaurants, said all of his franchises were forced to shut down on March 17 and throw out all of their perishable stock.
"The owners will have to borrow money to restock them when they open again," said Scott, whose business started in Portland. He estimated that only 50 of the franchises 500 employees are still employed.
Chown, Bigej and Scott said they have not yet heard from Gov. Brown or legislative leaders about their request, but believe there is bipartisan support among some lawmakers for doing so.
The teleconference was moderated by Preston Mann, director of public affairs for Oregon Manufacturing and Commerce.
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