The City currently imposes a Gross Receipts Tax on businesses to fund general municipal purposes. For 2022 the rates ranged from 0.053% to 0.975% of taxable gross receipts, depending on the business’s activities and amount of taxable gross receipts, with the alternative Administrative Office Tax at 1.47% of San Francisco payroll expense. Proposition F approved in November 2020 increased the 2023 Gross Receipts Tax rates for certain businesses, with more increases beginning in 2024.

This ordinance postpones the Gross Receipts Tax rate increases set for 2023 to begin instead in January 2025, for retail trade, certain services, manufacturing, food services, accommodations, and arts entertainment and recreation. It also introduces a new annual Gross Receipts Tax credit equal to 0.45% or 0.7%, depending on the business's activities, for businesses that open a physical location in specified zip codes of the City between January 1, 2023, through December 31, 2027. The credit is capped at $1 million per tax year, and can be claimed for a maximum of three tax years immediately following the year in which the business opened the location, but not beyond the 2028 tax year.

The ordinance is therefore expected to reduce the city's tax revenue from the affected businesses for the duration that the reduced rates and new credits are in effect. It prioritizes certain geographic areas within the city for development and could potentially create a differential business growth pattern.

The legislative objectives suggest that the ordinance aims to provide incentives for businesses to establish operations in San Francisco's specified areas, recognizing the importance of these sectors to the local economy, and to delay tax rate increases in light of current economic conditions to sustain business activity and growth.

The approval process for this ordinance includes endorsement from relevant committees or the Board of Supervisors as outlined in the legislative materials provided, eventually requiring the Mayor's sign-off or Override of a Mayor's veto.

Resolution and Ordinance documents, along with the referenced Legislative Digest, Budget and Legislative Analyst Reports, Youth Commission Reports, and other related formalities, provide a structured framework for accountability. These documents are part of the official public record, and adherence to the outlined processes ensures transparency and oversight.