COVINGTON, Ga. - In a tie-breaking vote, Covington Mayor Ronnie Johnston approved the first reading of a revision to its occupational tax. The change will require a second reading, which is scheduled for the council's April 15 meeting.
Johnston said the current occupational tax requires a $100 fee to be paid for any business employing zero to four employees. The proposed change would change the wording to require businesses with zero to one employee pay $25 and businesses with two to four employees would stay at the $100 fee. The rest of the fee structure would remain the same.
There are 572 of those in the city of Covington, so it is a broader range than just barbers and salons.Covington Mayor Ronnie Johnston
"It is a specialized tax that only hits barbers and hairdressers, it doesn't hit real estate and attorneys, it only hits hairdressers," Barry Cowan said during the public hearing on the proposed change. "The shop already pays the $100 or more, based on employees, and each individual stylist is having to pay."
Depending on how the business structure of the salon or barbershop is set up, individual stylists are not considered to be employees of the salon, but instead considered independent contractors - or separate businesses - that rent space from the salon itself.
"They would like to see it at $0, but $10 sounds fair to us," Cowan said.
Johnston said it is not only cosmetology professionals that are affected by the tax.
"This is consistent with anybody in the city of Covington - that actually follows the rules - that has their sole business up to one employee," he said. "When you look at people who have everything up to a guy that opens up a business by himself - and let's say he's a plumber - he's going to pay that $100.
"If you have somebody that doesn't employ anybody, but has an LLC ... they will have to get a business license and right now they pay $100.
"There are 572 of those in the city of Covington, so it is a broader range than just barbers and salons."
Making this change will cost the city thousands of dollars of tax revenue, he said.
"This change, just going to $25, is about a $40,000 difference for the city of Covington of revenues that we were bringing in to cover our costs to revenues we won't have," he said. "I'm in full support of that - you know, we'll figure out how to make that up somewhere else.
Johnston said some professionals - like real estate agents - are able to bypass the tax because of state legislation out of the city's control.
"Do I think that's right? No, I don't think that's right," he said. "Again, I'm not attempting to talk you in either way, I'm just making sure we have at least all the facts together as we make these decisions."
Councilman Josh McKelvey said the funds raised by the occupational tax are used to fund the city's planning and zoning department.
"At $25, you're looking at about $2 per month a year, that's a big difference versus the $100," Councilman Anthony Henderson said.
With Councilman Michael Whatley, Councilman Kenneth Morgan and Councilwoman Susie Keck casting the approving votes - making it a 3-3 decision- it is the mayor's duty to break the tie, in which he agreed with their decision and voted in favor of the proposed change.
McKelvey previously told the council and members of the public he was in favor of changing the rate to $10, not the $25 that was being proposed and that is why he could not vote to approve the first reading of the change as it was written. Henderson echoed his statement and said he could not vote in favor of the change at the $25 rate.