CC Resolution No. 99-119RESOLUTION NO: 99-119
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
ESTABLISHING AN INTERNET TAX INCENTIVE PROGRAM
WHEREAS, the City of Cupertino currently receives a large portion of their general fund
revenue from sales tax; and
WHEREAS, the trend for e-commerce sales is increasing and the potential for future
sales tax revenue from these sales is substantial; and
WHEREAS, the City is interested in providing an incentive program to key business-to-
business sector companies to encourage the location of Intemet sales sites within Cupertino;
NOW, THEREFORE, BE IT RESOLVED that an Internet Tax Incentive Program be
adopted by the City to encourage location of said sales sites.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Cupertino this 19th day of April, 1999, by the following vote:
Vote
Members of the City Council
AYES: DEAN, STATTON, CHANG
NOES: BURNETT
ABSENT: JAMES
ABSTAIN: NONE
ATTEST:
City Clerk
APPROVED:
Mayo~, ~'ity of)~uP~rtih~'-
Internet Tax Incentive Program
Purpose
The City is interested in providing an incentive program to key business-to-business sector
companies to encourage the location of Intemet sales sites within the City of Cupertino. With
the onset of e-commerce, the City believes that Intemet sales will become a substantial sales tax
source to Cupertino in future years.
Qualified Businesses
High-tech firms with a corporate headquarters or major presence within the City of Cupertino.
Qualified Sales
New local sales tax revenue only. This is defined as total sales tax paid by the corporation which
is actually received by the City, as calculated for each fiscal quarter, minus, the sales tax currently
reported by the corporation and any use tax on purchases by the corporation.
Services to be Performed by Business
A. Locate all hardware, software and staffing associated with Intemet sales within the City
boundaries.
B. Provide to the City a detailed analysis and description of any new local sales tax revenue
received by the City.
C. Provide a copy of the quarterly State Board of Equalization sales and use tax report.
Compensation to be Received by Business
The City is willing to compensate the company for its installation/operation of the Intemet site
for a period of up to five years. Compensation would be computed on a sliding scale ranging
from 25% to 50% once $250,000 of new revenue is generated per fiscal year.
Proposal
Sales Tax < $1,000,000'***** Sales Tax >/= $1,000,000'***
Sales Tax Received [ i City ~ _ City
$0-$249,999 t--0% 0 ~ 249,999 I '0~ 0 2_4_-9,999
$250,000- Retro to $1 25% 62,500 __--(62,499) 25%I 62,500 (6_2,499
$250,001-$500,000 25% 62,500 187,500 25_%_oi 62,500 187,500
125,000 [ 375,000 [ 125,000 375,000
$_5_0_0,000- * 1,000,000 40% 200,000[ 300,000 40%I 200,000 300,000
] _ 325,000 -675'000 40% .___ 325,000 675,000
$1,000,001 - Retro to $250K i 37,500 (37,500
i _ 362,500 637,500
$1,000,001-$1,250,000 50% 125,000 125,000
$1'250'001-$1'500'00-0 ....... i --- 50% 125,000 1.2~5,000
$1,500,001-$1,750,000
~___ _] __ _~.._ 50% 125,000 125,000
$1,750,001-$2,000,000 ~i ~l ~ - 50% 862,500 125'000i 1,137,500 125,000