Small business relief proposals include delaying tax that supports Student Success Act
Tuesday, March 24, 2020
The Student Success Act’s business tax is on the table as the Legislature considers responses to the coronavirus pandemic.
The Joint Special Committee on Coronavirus Response has held marathon meetings over the past week to consider dozens of ideas for the public’s health, safety and continued employment. The committee mostly focused on helping health care workers, vulnerable populations, low-income families and small businesses. Proposals include housing assistance, nutrition supports and business regulatory relief.
“We are here to enhance the state’s coronavirus response,” said Co-Chair Rep. Paul Holvey, D-Eugene, at the first meeting March 18.
The committee had its final scheduled meeting Tuesday, although more could be called. The committee’s leadership is working on a report to coalesce committee members’ priorities into policy recommendations for the Legislature.
The corporate activity tax that funds the Student Success Act was among some members’ top concerns. Legislators discussed delaying either full implementation of the tax or the first payments, which are due in April.
Delaying implementation would require changes to the law. Delaying the first payment would keep Oregon taxes aligned with federal taxes, which are now due July 15.
Many businesses hurt by the coronavirus closures are facing cash flow problems. Critics of the tax say that businesses with low profit margins, such as restaurants and farmers, will be especially hard hit.
The commercial activity tax charges $250 plus 0.57% of commercial activity over $1 million. It is a tax on all transactions, not just profits. About 9% of Oregon businesses, about 40,000 businesses, will owe the tax.
Sales of groceries and fuel are exempt, and businesses can subtract 35% of costs or labor. The goal was to tax as many businesses as possible with as low a rate as possible while generating $1 billion a year for preK-12 public education.
Despite the partisan divide that wiped out the recent legislative session, the bipartisan committee mostly was pulling in the same direction, even on the hotly contested corporate activity tax.
“We lost. We’re in. We’re a team here,” said Republican Sen. Brian Boquist of Dallas during a hearing, emphasizing the committee was only considering a delay of the tax.
During Tuesday’s meeting, Rep. Janelle Bynum, D-Clackamas, said the committee has to be careful to create targeted business relief that keeps businesses that don’t need help from “hiding behind” those that do.
Committee members expressed concerns about the state’s finances as well. The state relies heavily on income taxes, and unemployment is soaring. Members repeatedly called for tailored actions that will sunset when the crisis is over. They also want to give power to state agencies to change rules as needed.
“We may not totally be on the same page, but everyone agrees we need to have some regulatory flexibility,” Holvey said.
Although the committee frequently discussed education and schools, committee Co-Chair Sen. Arnie Roblan said those issues will likely be further explored in a possible future meeting. Roblan, D-Coos Bay, said he expects a special session, but its scope is still under discussion
The Legislative Policy and Research Office answered some committee questions related to schools.
The U.S. Department of Agriculture will allow meal reimbursements during spring break and school closures similar to its summer program. Oregon has received federal nutrition service waivers, including to operate food sites on school property during a closure, to allow students to eat the meals off the property, and to serve two meals at once.
A national disaster declaration by the president would give schools more flexibility to respond to the needs of other community populations.
The Oregon Family Leave Act allows employees time off to care for a sick child or to take care of a child because schools are closed.