By Vince Vasquez
Senior policy analyst
National University System Institute for Policy Research
Proposition D may have been defeated on Election Day, but San Diego City Hall still has viable options to raise new tax revenues. With an estimated $72 million budget shortfall looming on the horizon, now is the time for local elected officials to advance a proven program that could add thousands more taxpayers onto the city ledger.
At issue are “tax amnesties,” a policy whereby taxpayers are allowed for a limited time to repay part or all owed tax debt without financial penalties or prosecution. Amnesty programs are popular with municipal governments, who net new revenue and taxpayers through a short-term process, as well as delinquent enterprises, which may have accrued thousands of dollars in late fees and penalties for unreported income and unlicensed businesses. Though they vary in size and scope, tax amnesties all take a reasonable approach to capturing millions of dollars that would otherwise be used for parks, libraries and public safety services.
A long list of cities have introduced amnesty programs in the last two years, including Los Angeles, Fresno, Philadelphia, Oakland, Tucson, and Phoenix. Most recently this August, the Riverside City Council unanimously approved a six-month amnesty program. City staff estimates that once the program is completed, new annual recurring revenue is likely to exceed $1.5 million.
How much could the City of San Diego raise with a tax amnesty program? Recent evidence suggests the haul could be substantial. In 2009, Los Angeles raked in $18.6 million in newly paid taxes from 8,673 businesses, and on July 2010, Philadelphia netted more than $40 million.
Make no mistake — $70 million is a large hole to fill, but every additional dollar helps. While San Diegans wait for the comprehensive structural reforms that will truly fix our financial mess at City Hall, tax amnesties deserve greater consideration in the interim.
National University System Institute for Policy Research is an economic think-tank based in La Jolla.