Seattle City Council votes to repeal ‘head tax’ weeks after enactment

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SEATTLE (Reuters) – Seattle’s city council, facing stiff opposition from the business establishment, voted on Tuesday to repeal a newly enacted “head tax” imposed on the city’s largest companies, including, as a way of fighting an affordable housing crisis.

FILE PHOTO: The logo of Amazon is seen on a building in San Jose, Costa Rica March 21, 2018. REUTERS/Juan Carlos Ulate

The 7-2 vote in favor of repeal, capping an acrimonious public hearing interrupted by chanting supporters of the tax, came as momentum was building for a referendum drive against the measure just weeks after it was unanimously adopted by the council and signed by the mayor. (AMZN.O), the city’s largest employer, was at the forefront of a coalition of businesses running a well-financed campaign to place a repeal referendum on the ballot for the November elections.

As passed on May 14, the measure would have levied a new tax of roughly 14 cents per employee per hour to raise $45 million over five years, with revenue earmarked to build more affordable housing and support services for the homeless.

The tax would have applied only to the largest companies by revenue, those grossing at least $20 million a year.

Sponsors of the tax said Seattle’s biggest-earning businesses should bear some burden for easing a shortage of low-cost housing that those companies helped create by driving up real estate prices to the point where the working poor and many middle-class families could no longer afford to live in the city.

Opponents said they feared the measure would lead to an economic backlash.

Reporting by Eric M. Johnson in Seattle; Writing by Steve Gorman; Editing by Toni Reinhold

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