Seattle ready to repeal unpopular employer tax

The Seattle City Council and Mayor Greg Nickels plan to repeal an unpopular business tax they say discourages hiring.

The mayor proposed the annual "head tax" of $25 for every full-time employee in 2006. It raises about $4.7 million a year, revenue used for transportation projects, such as street and sidewalk maintenance.

In this economy, the mayor said in a press release, "we want to do everything possible to create jobs and help businesses grow."

Council members Tim Burgess and Richard Conlin are leading the effort on the council to repeal the tax. Even if $25 a year isn't enough to stop a business from hiring a new employee, it's complicated for businesses to calculate the tax, and it can be used by surrounding cities to make Seattle look less-than-business friendly, Burgess said.

The tax includes exemptions for workers who commute by bus, carpool, bicycle or walking.

"To me, this is kind of a first step to really strengthening our job-growth environment," Burgess said. "Admittedly, it's somewhat symbolic."

The move comes on the heels of a big midyear budget cut because of a revenue shortfall in the city's general fund, and the city faces a gap of at least $24 million in 2010. Burgess said the city can make up some of the funding with a commercial parking tax that's bringing in more than expected, and by paying off bonds more slowly. Some transportation projects may have to be put off, he said.

Emily Heffter: 206-464-8246 or eheffter@seattletimes.com