Brattleboro’s Business License (Tax) Needs Reform

At about this time each year, Brattleboro businesses generously donate over $50,000… to the Town of Brattleboro for a town business license.

That’s $50,000 that is diverted from food and heat drives, year-end bonuses, and holiday gift buying and into the town’s coffers. It is also an unnecessary hurdle for business owners in Brattleboro.

There are many things wrong with this approach, all easily solved if we are serious about being business-friendly.

It doesn’t need to be collected at this time of year.

The current system requires payments be made during the holiday season, when food drives, heat funds, and donations to other worthy causes need funds. This is the only time it can be collected, according to the way the town operates the program.

This could easily be changed to allow a business to register at any time during the year, like a driver’s license, and renew it at that same time each year. While we’re imitating the driver’s license system, we can also offer a two-year renewal option.

Fix: Register anytime. Renew annually. Have a two-year option.

The fee is arbitrary. It doesn’t need to be $50.

When first proposed, the fee was said to cover the costs of administering the program.

The program calls for each business to log in and update their own records in an online database. There is no way that it can cost the town over $50,000 to administer this database when most of the work is automated or done by the business owners themselves. Looking at the proposed FY17 budget, the cost of the program is $13,899. A $15 business license would more than pay for the program.

The fee, therefore, is not merely to cover administrative costs. Town costs associated with businesses registering in an online database are not $50,000.

Did we mention there is an additional fee for paying online, which is the preferred method of payment?

Assuming these business licenses are somehow necessary for Brattleboro to thrive, it would be wise to make the cost as low as possible to encourage business as much as possible.

Fix: $15 fee.

The fines and penalties are outrageous.

Have trouble paying due to cash flow at the holidays? No worry. You’ll just owe more for your business license in the coming weeks.

If you miss a couple of deadlines your business license plus fines can top out at over $180. (I know firsthand. We went this path one year.) This escalation in cost is rapid, within a couple of months. Late payment can increase the business license expense to over 370% of the original cost.

If you fail to pay the additional amount, the Selectboard also shames the business owner publicly by reading the name of the business out over TV, then puts it on a list to be sued in small claims court. A small business owner can go from having seasonal cash flow problems to threats of lawsuits from the Town in a very short matter of time.

The large fines aren’t actually necessary, nor are they in proportion to “the crime,” but are set up as such to trigger severe penalties.

Part of the problem, perhaps, is that this “license” is handled by the tax collection arm of our local government, unlike the usual licenses overseen by our Town Clerk. It’s been a tax disguised as a license fee since its inception.

The Town should aim to be supportive and helpful to small businesses. There should be flexibility built-in to the program, and less of an automatic reaction to calendar dates.

Fix: Remove current penalties and make system more flexible.

OR

Fix: Change the penalties and fees to a more reasonable rate, such as 3% added for late payment, compounded monthly.

There’s little benefit.

As it currently stands, there is little benefit to businesses for their time and money. Fifty dollars (or more) of business expenses typically buys something of value for a business.

By obtaining the license, a business can be listed in the town’s directory of businesses, which just about no one would ever consult to find a business. It is not a real benefit.

One claimed benefit is that by obtaining the business license, the other, more onerous process of calculating business personal property is avoided. But this isn’t true. Just last year we were asked to go through the long-form process after obtaining our regular business license. This process also came with threats of lawsuits and such, and long lists of accounting procedures to follow.

When we followed up to see what was really required, we were told that we could just make a list of our desks and office equipment and not follow any of the official instructions. It made no sense to ignore the instructions and take time to make a list of used desks and chairs bought 15 years ago, but it had to be done.

The other “benefit” is the ability to do business with the Town of Brattleboro. Only the Town requires proof of this business license.

If the fee is to remain high, tangible benefits should be created and offered, making the Brattleboro business license something a business owner looks forward to paying for each year.

Fix: Find ways to benefit those participating, and not just fee, fine, and threaten local businesses with lawsuits.

It’s not fairly applied.

Who gets nabbed for payment depends on who the Town is able to learn about. This becomes a penalty, in effect, for any business that makes itself known.

The playing field isn’t level, either. For some, such as those requiring a liquor license or a business contracting with the Town, proof of a Brattleboro business license is required. Other businesses in town never have a reason to prove they are properly licensed, save for avoiding fees, fines, and lawsuits.

Fix: The state already registers all businesses in Vermont. Shut down the local business license program as unnecessary.

It’s currently a stick, not a carrot.

The business license is currently conceived of and implemented as a stick, not a carrot. It is not designed to help local businesses or organizations. It is burdensome on smaller operations. Its purpose comes across as a money grab, picking the pockets of small businesses.

The program can be done at a lower cost to businesses, on a different schedule, with some sort of benefit for participating other than avoiding fines or a court appearance.

Comments | 9

  • Several years ago I worked as

    Several years ago I worked as the program coordinator/office manager for Brattleboro Time Trade- a non profit organization that operates on a system of no money being exchanged. Rather members offer services and accrue hours which are then used to get other services from BTT members. I received a notice about the business license and, silly me, assumed because this was a non profit organization with no exchanges of money we were not considered a business. Wrong. Not only were we considered a business but when I went to the Municipal Building with all the BTT legal paperwork verifying that we were what we were the town official I spoke to refused to look at the documentation or to have a conversation with me about this matter. We ended up paying the license fee and didn’t even get a damn listing in that useless business directory. Do you know why? When I questioned why we were not listed – since that supposedly was one of the great perks of being strong armed for $50 I was told we weren’t listed because….wait for it….we weren’t considered a business. So, there you go.

  • Got to Keep this Conversation Going

    Thank you for bringing this up again this year, Chris. I can not disagree with anything you’ve said here.

    My partner has a business that does benefit from being located in Brattleboro and he does want to give back to the community. He makes enough from his business that $50 won’t shut him down, but it is still a bit of a pill to swallow since we can’t find any reasonable justification for it. Still, he sucks it up and pays. You are right, had we just kept quiet he may have been able to fly under the radar, but choosing to become a positive presence in the community has exposed him, and it does feel in some ways like he is being penalized for giving back. We had to consciously make the choice. He hadn’t officially launched last year, so no real income, but we were hosting free educational events and had a website so we were concerned that if we didn’t pay up we were going to get blasted, fined, etc.

    I think a break for new businesses should be considered, let’s give people a couple of years to get on their feet!

    He does give back to the community in other, and in my opinion far more beneficial, ways (free field trips and educational opportunities for children and adults, creating jobs/bringing younger people to this area, participating in parts of the Comprehensive Economic Development Strategy on his own dime and putting a LOT of time, energy and effort into it; he contributes in countless ways.) We are making major sacrifices ourselves to do all of this because it is a passion and we care about and want to contribute to our community. But we could really use that extra $50 to help offset the cost of our free educational programs, to give more to his employees for the holidays (yes we still do that!) or even to keep for ourselves so we can be comfortable enough to continue what we are doing.

    On the flip side, I hope to be able to start a small business of my own in the future, just to pull in a little money, and the $50 fee is enough to give me pause. I might not make enough to make that worth it. Brattleboro needs to do better, we need to welcome businesses, support entrepreneurs instead of scare them off, we just need to do better.

    • Good idea

      “a break for new businesses” Excellent idea. Consider it added to the list of possible improvements. GS Precision/BDCC just got 10 years of tax breaks for agreeing to stay here in town. It can be done.

  • It's Anti-Business

    And just wrong.
    Your ideas are all sound and fair, Chris. This mafia-like tactic the Town is using must be stopped. And just where does the surplus $36K go?
    Any SB members reading this?

    • Business Tax in Guilford?

      I should check on this, but I’m betting Guilford doesn’t have this tax. Im a Guilford booster, of course, & would be delighted to see more businesses in our town. Algiers (Guilford Village on Rte 5, just 1.3 mi south of Exit 1) is a cool & happening place. The Friends of Algiers Village is now renovating additional space in the Country Store building, so one or two small businesses might find space there, just as one example!

  • Just eliminate it

    Just eliminate it, period. The paperwork hassle is worse than the financial cost.

    Does the town derive *any* benefit from having businesses be registered locally or are they just spending $14k to raise $50k by creating paperwork and hassle for every business in town?

    How would one begin the process to get this eliminated? Would the selectboard have to take action on their own motivation (good luck with that…) or can this be proposed from the floor at representative town meeting or something?

  • Greenfield

    I was in Greenfield last week and the parking ticket machine was covered with a sign wishing folks a Happy New Year and announcing that parking was free. I also suspect (though I don’t know for sure) that Greenfield doesn’t have this tax. Between parking tickets and this tax the town is making it hard for small businesses. Greenfield’s Main St. is full of small shops. I’m sure it’s hard for them as it is for small businesspeople everywhere but why make it even harder for small businesses to locate here?

    And this is another regressive tax. $50 is an “ouch” for a microbusiness and nothing at all to a large chain with a branch in Brattleboro.

    What’s the point of adding another burden for small businesses?

  • Run for change

    According to this: https://www.ibrattleboro.com/sections/politics/petitions-march-2016-brattleboro-elections-election-schedule-open-seats candidates have until 25 January to file a petition to run for Brattleboro Selectboard. A selectboard candidate could make the business tax an election issue.

Leave a Reply