tv [untitled] May 24, 2011 5:30am-6:00am PDT
obviously, but we have to get that. i am not sure an outright ban the -- ben is the way to go. you a prolific in the same problems with other monopolies. people will start running the business casually and not having to compete. maybe less than a drastic approach, but that is not one to stop the supporting this measure. we looked at an ordinance our proposal recently about yellow pages. i got a letter afterwards from a member that support to the company, if you will, that produces yellow pages, saying, "we would like to have another meeting. it sounds like the people at the meeting were radical environmentalists. we don't think they support the community." i am not a radical environmentalist. they did not get it, as far as i can see.
what we are doing is being sympathetic to the situation. there are a lot of people here who have a vested business interest. we are impressed with the presence of people here tonight. i am very impressed by it as a member of another organization. and maybe talk to you guys about how you run this organization and give you some pointers from my organization. probably a lot of the community -- i would like to see more of our reach to people on the streets, to hear the testimony. i think you reflect the community pretty well. for that reason, it is something i will have to go along with and support this. do we have somebody to make a motion? vice president adams: i move to support the new legislation prohibiting formula retail pet supply stores in the geary
boulevard fast food sub- district. president o'brien: all those in favor? anybody opposed? seeing none, the motion carries. [applause] next item, please. >> commissioners, you are now on item 11, discussion of possible action on an sbc resolution supporting a be 153, an act to amend section 62 of three of the president -- of the revenue and taxation code. presentation by hut landon. you have explanatory documents and a draft resolution. president o'brien: thank you. >> thank you, commissioners, for hearing this. i will try to be brief and give
a little history of this. hopefully, i can address questions that i understand some of you may have. in saying to amend the current language -- we prefer the word to clarify. i think one of the things that is really important here is that we are not talking about a tax increase. there is existing tax code, state tax code, that we think right now actually creates a nexus for companies like amazon and others. the board of equalization disagrees with that. what this seeks to do is clarify the language and make it less of a -- less vague than amazon
lawyers have told us it is now. but what this really is about is supporting local businesses like the ones who have heard from tonight, or supporting an out of state giant chain whose business model is based on sales tax avoidance. that is really an important piece of all of this. i hope we will keep this in mind as we talk about all this. there are two ways, basically, that you can create what is called the nexus in the state. if you have in texas, you are required to collect sales taxes. one of the ways is if you have a physical presence, a store and a website. if you sell something on the website to the customer in california and have a store in california, you have to create sales tax on the online sale as well as in your store. that is pretty straightforward.
the other way that in texas is created, according to existing tax code, is if you have people working on your behalf -- sales agents or affiliate's who are driving business, who are, in effect, selling for you on your behalf in the state. amazon has over 10,000 affiliate's in the state driving business to amazon every single day. what ab 153 would do is state very clearly that those affiliate's relationships, the sales agents for them sun and others, create business in the state and therefore should collect sales tax. amount to briefly explain the notion of the affiliate's and sales agent. there are affiliate's who are,
for instance, schools. mice -- my son's school was an amazon affiliate's. they said if we went to the website and bought a copy of the book the fifth grade class was reading, amazon would give them a little kick back. authors do this themselves to sell their books. they send people on their web sites to amazon and get a commission back. amazon will tell you that those people, sales agents, are creating a link on their web site. amazon -- we could argue that point. there are many other affiliates who have e-mail
lists and websites. amazon provides weekly list of specials, just like what you get when stay in your mail from what the market are safe with, the things you get from local stores. emma's unselfish out to their -- amazon sends this out to their affiliates. here is the weekly special. get the deal. and the sun gives them a cut back. that our sales agents, and that are proactively soliciting business. what nancy skinner path bill says is that kind of action is a nexus, and they have to collect sales tax. in terms of the affiliates, that is the deal. the board equalization says that sales tax revenues lost in the
state of california is now $300 billion annually. we have been fighting desperate with the northern california independent booksellers association. we have been fighting this in california for 12 years. amazon have been collecting sales tax in the last decade at, let's say, $200 million a year. we would give them credit for not having sold so much 10 years ago. multiply that by 10 years and it is a lot of money. the advantage that amazon and the others have over all the businesses to sought in this room, and i want to get back to that, is basically a 10% price cap, 9.75%. off the bat, they get a 10% better deal. this book business, which is why we get involved -- i used to
joke that amazon would soon disappear -- would soon be selling lawn furniture. you can buy a lawn furniture now from amazon. home depot told us the no. 1 seller of barbecues in the united states -- home depot -- amazon.com this is a huge competitive disadvantage for california businesses large and small. this is one place where wal- mart, target, and petco are on the same side with the small businesses. this is about do you support california businesses, their employment, and all the rest, or do you support and out of state e-tailer whose business model is built on tax avoidance.
commissioner clyde: thank you for your presentation. and thank you for clarifying many of the questions i have had about this legislation since it was first brought to my attention. but it has been said that the affiliate's will be heard in california, the 10,000 currently selling from amazon. would you respond to that? >> walmart, best buy, home depot, and i think macy's have all offered publicly any affiliate of amazon who may get fired if this legislation passes -- one of the ways in the sun can avoid this is -- the ways amazon can avoid this is to fire all the affiliates. walmart and best buy have all offered to take those
affiliates in. those affiliates can still sell to their customers the same things amazon is selling, through walmart and everyone else. the only difference is sales tax would be collected. commissioner clyde: is that fact that now those affiliates will have to collect sales tax? >> the affiliates will not have to. the companies the represent, whether it is amazon or -- there was a guy who is not connected to amazon. he is running a photography program. he has a photography store in new york who carries something that no one else carries. by him representing them on his website and letting his california customers know about the store's stuff, he is providing this service.
what he is actually doing is allowing the new york store to avoid collecting sales tax in the state of california with those customers. what he says is if they are required to collect sales tax because i am an affiliate, they will just get rid of me and i will have to leave the state. that is potentially the case. however, it is also the case that fireside camera on chestnut street is collecting sales tax and has to compete against the sky. it is flat out unfair. it is a business model. it is an unsustainable business model. commissioner clyde: i am of the understanding that amazon has come under significant criticism from other corporations for this practice because, as you know, we have serious tax revenue problems and equality issues right now at the state and local level. >> i have heard that.
commissioner clyde: there has been quite a bit of corporate criticism of amazon's stance on this taxation issue. thank you. president o'brien: anybody else? just an interesting question for myself. does the reverse happened? the california company's benefit from selling into other states, that are based out of california? >> they do sell into other states. in states where there are such laws, the have to collect sales tax. there are california companies selling into, say, pennsylvania. the way the law was intended is to have a threshold. the threshold right now is $10,000. it may get a higher. basically, if i have a bookstore and and selling used rare books and sell less than $10,000 worth of books into the state of
pennsylvania, i would not be liable for their sales tax as a small business. if i sell more than that into a state, or five or six states, i would be liable to collect sales tax. i think the notion is that once you get to a certain level that is part of the deal. the other thing people say that i have to remind you -- they say it is a burden to collect sales tax. you have to report it. you have to fill out forms. yes. the cost of doing business online. do you want to talk to these businesses about what they have to do to be in business in san francisco? it is the cost of doing business. if you choose to go on line and sell things, you get the benefit of not having to pay rent. but avoiding sales tax should not be one of the benefits. president o'brien: my personal good instinct is that i do not
foresee amazon deciding to pull out of california. would it be too big of a market to get sulky about it? >> that is an argued point. they have done it in other states, but not in other states where they have confessed affiliate's. they did that in north carolina, where they have 12. one of the things this -- the things these affiliates are doing is driving new business to amazon. they are capturing people who are not on amazon now. if you have an account on amazon, you do not have to go to an affiliate. they are capturing someone who is interested in amazon, even if it is to help their school or church. they go to amazon. they create an account. they give their credit-card number. amazon now has that captured person for the rest of their lives. they can seldom lawn furniture.
the affiliates serving as ways to get new people. we will see. amazon may decide that the tax advantage is worth more than the affiliates, but i think it is a risky thing. even if they do get rid of them, those affiliates of other companies that can latch onto and still sell online to people, and we get the sales tax. president o'brien: has there been much of a reach to the affiliates -- much outreach to the affiliates? >> amazon and best buy have written open letters and there are affiliate networks that have been spoken to. it is actually a very easy process if you are an affiliate. i think some of them are associated with some of these companies anyway. where you buy your flat screen
tv does not matter, except for the tax break. president o'brien: thank you. anybody else with any questions? >> richard open it to public comment. -- we should open it to public comment. but i want to make clear that hut is here to provide information. the commission can take this as an informational item. staff has drafted a resolution, should you want to take action. you can move on the resolution. president o'brien: do we have any public comment? >> i am art swanson, president
of the small business network, san francisco. those of you who are familiar with our organization -- we voted unanimously to support this measure. we believe it would even the playing field, a phrase used far too often. however, think about it. all you are asking someone to do is pay tax like the rest of us have to, the rest of the small businesses. there are other precedents for this in other lines of work. my other day job is in property management. the state of california is now coming after my industry for things along these lines of sending disbursements to out-of- state owners of buildings without withholding some money from them. there is all kind of different ways the state is now looking into capturing money that is
actually, like it or not, rightfully theirs. it is a simple reality. it goes along with the thinking in this wonderful meeting all day today about small business and making sure that the opportunities are the same for everybody. i think this falls in the same kind of line with all of that. all everyone is asking for is to be able to play the game the same way. i appreciate all your time. president o'brien: thank you. is there any further public comment? >> stephen cornell. every group of belong to is for this legislation -- the small business advocates, the small business network. we are all for it. a couple of arguments i have seen on this. one about how hard it is to have all the different tax breaks. i have a small business. i sell two different entities in different counties in
california. -- to different entities in different counties in california. it is in my off the shelf software to tommy when to charge -- to tell me how much to charge sales tax in which county. it is very easy. it is not a burden on any business that has a basic computer for retail. this helps level the field. the argument about how many affiliates might be lost -- nobody was there when all the brick and mortar stores went. how many bookstores have gone down the toilet because of this? tried by an wallpaper now in a store or looking for wallpaper. you cannot find it anywhere. the biggest supplier of barbecues, a basic thing for a lot of hardware stores or home centers -- it is amazon. it is a big deal.
a lot of business has been lost on this. thank you. president o'brien: thank you. any further public comment? public comment disclosed. director, as it is now, we approve this legislation we drafted? >> it was initially presented at the retreat and there were some questions the commission had. the commission reviewed it but did not take any action and asked for a full presentation on the bill at the state before taking action on the resolution. president o'brien: ok. do we want to take a motion to approve it as written? commissioner o'conner: i will make a motion to approve. president o'brien: all those in
favor? anybody opposed? seeing none, the motion carries. next item, please. >> thank you. that was a longstanding problem. >> commissioners, you are now on item 12, a presentation on the sfeda by jenny mcnulty, executive director of urban solutions. >> i see we are the only ones left with you. thank you for spending your monday evenings doing this each month. i am the director of urban solutions. we are one of the nine members of the san francisco economic development alliance. representatives of three of our member organizations are going to share in the public about the work we are doing. just to start us off, i would like to introduce a family g--
emily gasner, executive director of working solutions, and code- share of -- co-chair of sfeda. >> thank you, jenny. i'd like to thank the small business commission for giving us the opportunity to tell you more about the sfeda this evening. we are a coalition of small business assistance organization. our mission is to help low and moderate income san franciscans by improving their quality of life by small business and small enterprises. what we do is we maintain a member forum for our member organizations an we share best practices in our expertise. we leverage resources. we share business referrals.
we develop high business development services. and we act as an advocate for small business and funding in san francisco. sfeda consist of nine members of organization, la cocina, mission development agency, pacific community ventures, renaissance enter per nureship center, the small business development center, urban solution, women's initiative for self-employment and working solutions. the sfeda, member organizations have had a combined impact on san francisco. last year sfeda, member organizations supported 2,500 small businesses which created over 1 new jobs and retained an additional 2,000 jobs. we did this with just over $1 million of city funding from
the office of economic and workforce development fund which enabled us to also leverage an additionalle $4.5 million of funding so we could invest in micro enterprise and small business support in san francisco. i'd like to acknowledge the roll of the small business assistance center and their partnering with their san francisco san francisco alliance in helping us to get the word out of our coalition organization. and now i'm going to switch hats and tell you a little bit of working solutions as i am the executive director of working solutions. working solution has a lot of great sort of interesting updates to provide. but tonight, i just wanted to share three in particular with you. we provide micro loans of $5,000 to $50,000 to small businesses, plus five years of business coaching, advicing and mentoring.
to each of the businesses after they get a loan with us. the first thing i wanted to mention is that we administer the city of stran's revolving loan fund. despite starting this loan fund in the midst of a very tough economic time we successfully lent out all of the loan funds to date. we've made close to $670,000 in loans to 27 small business at a 4%, 6% reasonable interest rate. these loans have resulted in new jobs and all the businesses are paying back their loans. that means the money is revolving. $70,000 has been paid so far on these five year loans and as we receive those payments we're able to make those. half of them are pure start-ups. those are businesses which increasingly have absolutely no access to credit whatsoever.
so we really feel that that's a really great group of businesss that need our assistance. secondly, i wanted to acknowledge the partnership that working solutions has with the small business assistance center. we not only refer -- receive referral for loan candidates, we have a great partner for resources for the businesses we work with when they have questions about permits and licensing and in particular the a.d.a. compliance topic which is affecting many of the businesses that we work with. thirdly, we're celebrating the success of the city's loan fund on monday may 16 at a ribbon cutting ceremony with the mayor. i'd like to invite do you this event. we hope you can join us and the information on the -- sorry -- the information on the event you can find in the brochures that we have handed out. in conclusion, thanks to much
for your time. working solutions is a vibrant part of san francisco providing economic opportunities for small businesses. we're successfully administrating the city's loan fund. we're successfully partnering with the small business center and we hope to see you at the ribbon-cuing ceremony on the 16th of may. next we have a representative from women's initia five who will tell you more about the great work their doing. >> thank you. my name is elizabeth planning and i'm here with women's initiative and we are so proud to be part of the san francisco development alliance. i wanted to share a bit of you about women's initiative in case you are not familiar with program and ask for your help. it was founded 23 years ago to help low income women start and expand small businesses by providing business management training, micro loans and ongoing support in english and spanish. we have served 24,000 low
income women in five bay area counties. helping expand and start hundreds of businesses and feeding the local economies and all the cities of our beautiful san francisco. nearly 1,000 of these jobs are located in san francisco. on average, our clients increase their household income by 60% just one year after graduating from our program. our return on investment is 30-1 which means that for every dollar invested in our program, 30 has returned to the locallele economy. as a result paying taxes job creation and decrease dependants on public assistance. and we need your help. women's initiative has received $100,000 from the community development block program. we have completely exceeded our we have completely exceeded our goals.
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