Seattle City Council likely to repeal controversial 'head tax'

The Seattle City Council, faced with continuing fierce opposition to its recently passed controversial tax on big businesses, or "head tax," has scheduled a special meeting Tuesday, June 12, 2018, to consider repealing the ordinance. (Photo: KOMO News)

SEATTLE - The Seattle City Council, faced with continuing fierce opposition to its recently passed controversial tax on big businesses, or "head tax," has scheduled a special meeting Tuesday to consider repealing the ordinance.

Council President Bruce Harrell announced Monday that he will sponsor legislation to repeal the controversial ordinance, which was passed last month and currently is scheduled to take effect Jan. 1, 2019.

Harrell said expects the full council to vote on the proposed repeal during Tuesday's meeting.

WATCH: Harrell speaks on possible repeal of Seattle's "Head Tax":

“Before you impose a tax, especially one as significant as the employee hours tax, I think you have to convince the public that you are using the money wisely and I don’t think that persuasion has been there,” Seattle City Council President Bruce Harrell.

The head tax, also known as an employee hours tax, would have required large businesses operating in the city to pay about $275 per employee, per year, for the next five years to fund a response to Seattle's growing homelessness crisis. The measure would raise an estimated $48 million.

“I respect my council colleagues and the Mayor tremendously I also am incredibly driven by the sense of urgency to get folks inside,” said Councilmember Teresa Mosqueda, who is one of the two hold-outs who is against the repeal.

But opponents of the tax vowed to fight it, and said Monday that they had gathered enough valid signatures to place a referendum on the fall ballot to repeal the tax.

Republican State Sen. Mark Schoesler also has said he would introduce a bill in Olympia to repeal the tax.

Seattle Mayor Jenny Durkan on Monday conceded that the battle over the tax was becoming counterproductive.

"It is clear that the ordinance will lead to a prolonged, expensive political fight over the next five months that will do nothing to tackle our urgent housing and homelessness crisis," Durkan said in a prepared statement. "These challenges can only be addressed together as a city, and as importantly, as a state and a region.

“We heard you. This week, the City Council is moving forward with the consideration of legislation to repeal the current tax on large businesses to address the homelessness crisis," Durkan's statement said.

The mayor's statement also was signed by all members of the City Council except Kshama Sawant and Teresa Mosqueda.

Sawant issued her own statement via Twitter, saying the move to repeal the tax is "a capitulation to bullying by Amazon" and other large businesses.

She and other supporters of the head tax had argued that large employers like Amazon had contributed to the homelessness crisis by bringing thousands of high-paid employees to the city, which in turn has raised the cost of housing and forced people into the street. Therefore, they should be forced to help fund a solution to the homeless emergency.

John Murray, a spokesman with the No Tax on Jobs campaign, said Monday that the coalition appreciates that the "Seattle City Council has heard the voices of the people loud and clear and are now reconsidering this ill-conceived tax."

He said they'll await the result of the council vote. The campaign has raised about $235,000, with many more employers pledging their support, including Amazon, Starbucks and Paul Allen's Vulcan.

Proponents say people are dying on the streets, and while city-funded programs found homes for 3,400 people last year, the problem deepens. The Seattle region had the third-highest number of homeless people in the U.S. and saw 169 homeless deaths in 2017.

But opponents said large businesses should not be penalized for paying good living wages to their employees.

Local family-owned, mid-sized businesses like Dick’s Drive-in, also said the new contentious head tax was a tough pill to swallow. The owner’s grandson, Saul Spady said the burger chain would have to pay tens of thousands of dollars under the new head tax.

“I don’t see a compromise at all. I see a council that is continually looking for avenues to increase revenue with zero accountability,” Spady said after the tax was passed. “They’re forcing us to really think really hard about having a more efficient work force, giving less to charity or possibly not being in the City of Seattle.”

POLL: Should the city council repeal the tax without a replacement plan? Answer the poll below or click here.

The debate over raising taxes on businesses like Amazon in Seattle comes as 20 cities vie to lure Amazon's second headquarters and as it expands its workforce in Boston and Vancouver, British Columbia.

Cities have offered lavish tax breaks and incentives to lure the company and its promise of adding tens of thousands of high-paying jobs. Critics however have said it was wrong for profitable company to push for public money, especially considering the added costs to infrastructure and services the new headquarters would bring.

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