Oakland's businesses are struggling. Voters will decide on giving them a tax break.

OAKLAND — The city will ask voters in June to give thousands of small businesses a significant tax break in an effort to keep storefronts open over the next year amid a regional economic decline.

The proposal, which will appear on the ballot as Measure C, would exempt businesses generating less than $1 million in gross receipts from paying taxes to operate, while a newly opened business of any size would be excused from license taxes on the first $1 million it generates.

The measure arrives at a moment of deep fiscal strain for Oakland, where the local government expects revenues to fall short of costs through the end of the decade.

But the tax break would not deny the city much revenue. It affects 44% of all licensed businesses in Oakland, which generate $2 million in annual tax revenue - a modest figure, given that most of these are small businesses with fewer than 10 employees, per city data.

Individual businesses eligible for the new exemption would see anywhere from $60 to $4,100 in savings based on their gross receipts, according to city reports.

Supporters of the measure say it is a worthy tradeoff, providing a lifeline to the kinds of street-level businesses that make Oakland’s commercial corridors feel alive.

“We realized we need to grow revenue long term and not just think about our immediate gains,” said Councilmember Zac Unger, who noted that local elected officials are not allowed by law to directly campaign for such a tax break. “The idea is if we help the businesses stabilize, that will help us in the longer run.”

Still, the ballot question appears just months after City Auditor Michael Houston found that Oakland’s own collectors failed to fetch millions of dollars in revenues from business license taxes.

Through a third-party Sacramento consultant, the auditor’s office found that Oakland’s revenue division did not collect much of the revenue that was due to the city between July 2021 and June 2024, likely denying the city millions of dollars in revenue. There’s no official estimate for the money lost.

Oakland already tried to reform how it collects in 2022, when voters amended the tax structure so that businesses generating less revenue would face lower obligations than those that bring in more money.

City officials hope the tax relief will curb rising commercial vacancies. Nearly 38% of downtown Oakland office space sat empty as of early 2026, according to Cushman & Wakefield, up from about 11% before the COVID-19 pandemic. Retail vacancies in core commercial corridors are running roughly triple pre-pandemic levels.

“There isn’t enough foot traffic,” said Elaine Taing, the owner of CravLings, a downtown lunch eatery next to City Hall. “There used to be people all around, but not so much anymore.”

The measure requires only a simple majority to pass - unlike tax increases, which need two-thirds approval. If approved, the City Council could extend the programs for up to three additional years with a supermajority vote of six council members.

The expected $2 million revenue impact was already pre-funded as part of the city’s two-year budget adopted last June.

Unger and Councilmember Janani Ramachandran modeled the proposal in part on San Francisco’s “First Year Free” program, which since 2021 has waived initial registration, permit, and license fees for new and expanding businesses with less than $2 million in gross receipts.

By San Francisco’s own count, nearly 11,000 businesses have enrolled and about $5.95 million in fees have been waived by the program, which Mayor Daniel Lurie last year approved extending through this June.

Oakland’s version is more aggressive in some ways. It waives the gross receipts tax outright rather than registration fees, but it also applies to a narrower slice of activity, at least initially.

The departures of certain Kaiser Permanente offices and a string of prominent restaurant and bar closures have come to symbolize the city’s struggles to retain employers and attract new ones.

The city’s Five-Year Financial Forecast, published last year, projects General Purpose Fund deficits of $115 million to $130 million per year through fiscal year 2030, even after the council closed a roughly $280 million two-year gap last year through layoffs, position eliminations, and new revenue sources. Business tax collections - which totaled about $130 million in fiscal year 2025 - are expected to grow modestly.

The recent city auditor report painted only a bleaker picture.

Oakland’s tax compliance division, the report found, sent no batches of delinquent accounts to the larger collections division at all in 2023. When it finally forwarded more than 4,000 accounts in 2024, the vast majority had not been properly researched and had no supporting documentation attached.

In a typical year, the bureau may refer $9 million to $12 million in delinquent accounts for collection - revenue that the audit said was put at serious risk.

The findings provide a backdrop to the city’s latest ask of voters to forgive roughly $2 million in small-business taxes. The measure has drawn no organized opposition.

For most of the businesses that would benefit, the amounts at stake are modest. But supporters argue the symbolic weight is the point: a signal, backed by voter mandate, that Oakland is still open for business.

“We like the competition,” said Jeffrey Wharry, owner of Gus’ World Famous Fried Chicken, in reference to other chicken joints downtown. “But it’s been hard - we opened during COVID, and it’s been a wild ride.”

Shomik Mukherjee is a reporter covering Oakland. Call or text him at 510-905-5495 or email him at shomik@bayareanewsgroup.com.

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This story was originally published May 7, 2026 at 4:57 PM.