9 Investigates: Changes to business privilege license

by: Allison Latos Updated:


It costs money to run a business in Charlotte. Some companies are taxed as much $10,000 a year for the privilege of doing business in the city.
Critics said that tax raises the prices that businesses charge you.
April Bell makes organic body creams from her Mint Hill kitchen. She started her company, A Kiss from Nature, after developing eczema to help others with skin problems.
Even though Bell's company is not in Charlotte, she pays taxes to the city –- $50 every year -- for a business privilege license.
“I probably got it about three weeks ago,” she said.
North Carolina municipalities can charge companies inside their corporate limits and beyond if those companies conduct business or solicit there for customers.
Mecklenburg County Rep. Bill Brawley says that tax hits the customers.
“When you go to a store you pay that tax, the goods you buy include the cost of all of those fees. You pay for it. Not the business,” Brawley said.
The privilege license tax on businesses isn't equal statewide and Brawley calls that unfair.
“A store that might pay $100 in Gastonia might pay could pay $10,000 in Charlotte, might pay $22,000 in Durham and that's for the same activity. It is very inconsistent,” Brawley said.
Channel 9 requested a list of businesses that are charged Charlotte taxes and Eyewitness News showed the findings to Brawley.
In Charlotte, 42,128 companies pay between $50 and $10,000 in taxes, depending on their gross revenue.
Channel 9 found thousands outside Charlotte that the city taxes for doing business, including companies as far away as California, Florida and New York.
Hundreds of those businesses are also in Brawley's Mecklenburg County district.
“You shouldn’t use this as a hunting license to get anybody that ever sells anything to a resident of your city,” Brawley said.
Channel 9 researched other municipalities and found some towns, like Mint Hill, Huntersville and Cornelius, don't even charge a privilege license tax.
Charlotte Mayor Pro-Tem Michael Barnes said that should be each city or town's decision without the state getting involved.
“It feels like another attack from them on us,” Barnes said.
He says the business license tax is crucial to Charlotte's budget, bringing in about $18 million a year.
“We use that money to pay policemen, to pay firemen, to take care of basic city services,” Barnes said.
Barnes warns if lawmakers trim the tax, those services could be cut or Charlotte could have to raise taxes on residents.
Later this week, Brawley and state lawmakers will consider capping the privilege license tax at $100 statewide and stopping cities from charging companies outside their corporate limits.
“Don’t want to pay a tax if I don't have to,” Bell said.
Bell supports the changes as she works to grow her business.
The revenue laws committee will vote on the bill Tuesday.
If it passes, the finance committee could take it up as soon as the end of the week.
Barnes hopes the city can convince lawmakers not to reduce the privilege license tax.
But if they do, Barnes hopes changes will be gradual so the city can adjust to the loss of revenue.