Recent accounts of Richmond businesses dealing with tax issues must be fixed, by Andreas Addison
2/1/2024, 6 p.m.
Richmond is running the risk of losing its charm.
But how can our city lose its magic just like that? Richmond is frequently featured on national lists of
best cities for food and outdoor activities, like our abundance of festivals.
For a city our size, we boast a wealth of entrepreneurs, creators and founders who have carefully developed an idea or a passion that is part of a vibrant ecosystem across our community. I love bringing friends and family to visit to show off our incredible city. But recurring issues in city government are threatening the resilience of our small business community. And to put it simply, it’s because of bad customer service.
The recent accounts of businesses dealing with tax issues with the City of Richmond need to be fixed once and for all.
These issues are not new. We have all read these headlines before. Stories about permitting delays, lack of responsiveness, and lack of communication about late payments being assessed penalties, fees, and interest damage our title as the best place to live, work, play and visit. Dreamers, entrepreneurs and investors are reading these headlines repeatedly, guiding their decisions on where to invest their time, talent and money.
In response to the current situation, we must show our businesses and entrepreneurs we have heard their issues and complaints. Last week, we introduced legislation to change a long-standing City Code rule about how the City applies penalties, late fees, and interest to tax payments. While this is important, it still doesn’t address the more significant issue: resolving our business owners’ list of grievances about their tax payment situations.
We need to make whole all the businesses with outstanding tax payments with accruing penalties, fees, and interest the path to pay what is owed. Whether this is a tax amnesty program or an appeal application process, we need to provide a way forward. Second, for all the businesses that were fed up with no response or path forward that paid their astronomical penalties, fees, and interest, they also need an appeal process. We do not balance our budget on accruing penalties, fees, and interest.
While we need tools to enforce compliance and timely payments, this current problem has gone on far too long and needs to be fixed. While legislation is needed, these issues need to be included in our strategy and plan to fix this issue once and for all.
As a small business owner, I had to apply for building permits and a business license, and I can attest to the challenges of getting up and running a business in Richmond. I was fortunate enough to have been informed and guided by others’ stories and accounts of navigating City Hall.
But even as a former City employee and current City Council representative, I found this process daunting, confusing and complex.
For example, at several stages of the building permit process, I received a notification of “permit rejected.” The permit was not rejected; it simply could not be approved as currently submitted. Instead of that message, I repeatedly was told, “My permit is rejected.” What does that tell a new business owner when the permitting webpage is adversarial before they’ve even opened their doors? If we share in the goal of this business opening and succeeding, we must engage and communicate in that manner.
Many of the processes and systems within City Hall have been designed to conform with old state codes and outdated bureaucratic processes that govern each step. While we are working to correct, modernize, and update these old policies, it doesn’t fully address the actual cause of the issue today.
The customer experience and perspective must be present and our priority. Each city department has a role in supporting the opening and operation of small businesses. We must refrain from telling folks how the city processes work and focus on our customers’ experience.
We must make it seamless, easy, and predictable to deal with City Hall. Both Henrico and Chesterfield operate by the same codes and regulations of the Commonwealth of Virginia, yet their businesses and residents have a completely different customer experience.
They are seen as a partner, helping small business owners not only navigate the process but also explain the next steps, expectations, and status of applications. We must do the same in Richmond.
Three years ago, I championed reducing the financial burden of Business, Professional, and Occupational License taxes (or BPOL taxes) on our small business owners. Our BPOL tax rate is almost triple that of the surrounding counties. This tax is on the total receipts of a business or revenue made on goods created and sold by a business. In February 2022, I passed legislation to amend the threshold at which the City begins taxing businesses.
Before, a person began paying BPOL taxes when their business earned $100,000 in gross receipts. My legislation raised that threshold to $250,000, providing immediate relief to more than half of the small business owners in Richmond. The tax bills of some of our smallest businesses were eliminated, save for a $30 annual fee.
Just as important as financial relief is relieving our business owners of time and frustration with City processes. Given the difference in tax rates for businesses across the region, compounded with the challenges businesses have faced recovering from the pandemic, we must change how we approach the vibrant community that makes Richmond so attractive.
To attract and retain businesses, we must reshape our processes to meet them where they are. More importantly, we need to restore trust in City Hall. We can only do that by transforming our relationship with our businesses and our residents as an ally and partner in their success. At a minimum, we should offer small business owners what they offer our residents and visitors: good customer service.