‘Revenue is zero’: Coastal shops struggle to weather pandemic

Coronavirus

Small businesses say the CAT tax adds to the pain of the shutdown

PORTLAND, Ore. (KOIN) — The Oregon coast has taken the brunt of the state’s economic impact due to the pandemic. Driven by tourism, without people at the beaches, shops, and hotels, making a profit as a small business owner on the coast is nearly impossible.

“Revenue is zero — we have nothing coming in,” said Michael Schneider, General Manager of the Inn at Spanish Head Resort.

No tourists. No revenue. That’s the case for most small businesses along Oregon’s coast, which has been economically hammered by the pandemic and subsequent shutdown. According to the Oregon Employment Department, out of the top six counties that have filed the most unemployment claims per capita, four of them are coastal counties.

“That’s not surprising with our reliance on tourism, agriculture, and fishing,” said State Rep. David Gomberg. “We are struggling more than in other parts of the state. And our chambers are telling us that as many as one-third of our small businesses are not going to recover from this economic downturn. That’s dire news.”

The empty streets of Seaside. March 23, 2020 (Courtesy Seaside City Manager Jon Rahl)

During the first-ever virtual Coastal Corral, state legislators talked about how to help their suffering small businesses who rely on currently non-existent tourism dollars. According to some of the lawmakers and business owners, one way to do that would be to alleviate the pressure of the Corporate Activity Tax, also known as the CAT tax.

The CAT tax went into effect at the beginning of 202 and requires virtually any business to pay more than half of 1% on any sales over $1 million, plus a flat rate of $250. That taxed money is designed to raise about $1 billion for Oregon’s education system. Some coastal business owners now say that tax is a burden to many who simply cannot afford it during the pandemic.

“If you break even for the month, or a quarter, or at a loss — it doesn’t matter. You still pay on the total dollars that come in the door,” said Jennifer Wagonner, co-owner of R&R King Logging in Florence.

“We really are trying to be sensitive to the fact that this is going to be impactful for some folks, but also knowing we’ve heard projections there could be a $2-3 billion shortfall over the net biennium,” said State Rep. Tiffiny Mitchell of Astoria.

Mitchell said the Department of Revenue is looking at strategies to help alleviate the CAT tax on businesses struggling during the pandemic.

Continuing Coverage: Coronavirus

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