Representatives from Darigold and Costco Wholesale Corporation urged the Issaquah city council to reconsider the Business and Occupation tax increase in Mayor Fred Butler’s 2015 budget proposal. The comments were given during

Under the proposed 2015 budget, the B&O tax rate for manufacturing, wholesale and retail businesses would nearly double to 0.15 percent of gross income on April 1, 2015 and increase again to 0.20 percent in 2016. The rate on all other businesses — currently higher than on manufacturing/wholesale/retail — would increase once to 0.12 percent.

Sharon Appelt, the tax director of Darigold Inc., said the manufacturing increase could be detrimental to the slight profit margins — below 5 percent, Appelt said — of the dairy manufacturer’s Front Street plant. The plant, which makes cultured dairy products, employs approximately 120 union wage workers, she said.

“Every little notch you take out of the margin puts that plant more at risk for its operations,” Appelt said.

Appelt also expressed displeasure with the fact the rate for services would be lower than that for businesses that created commodities under the proposal.

“So a CPA, which is what I am, would pay a lower rate than a manufacturer that makes boxes of butter,” she said. “Think about that, it is counterintuitive.”

Costco VP Arthur Jackson said the company considered paying its local taxes on store operations a corporate responsibility. But the sharp increase of the current rate would be threatening to the local warehouse store, he said. He proposed a more gradual increase of the tax rate to .1 percent in 2015 and .12 percent in 2016, pending a study of the effect of the increase.

“The above schedule realizes a 75 percent increase on the B&O tax rate over a three-year period,” Jackson said. ”City revenue will actually increase at a higher rate based on sales growth, organically.”

Issaquah Chamber president Matthew Bott urged review and minimization of the tax increase, following the Chamber’s formal coming-out against said increase.

Evergreen Ford partner Tony Rehn spoke last against the proposed increase. He said that though his car dealership would be considered a small business compared against Costco or Darigold, the tax impacts would be large. Rehn claimed the dealership’s tax bill could rise to $200,000.

The city council did not vote on the B&O tax proposal at the meeting, but is expected to affirm a plan with the passage of the budget near the end of this year.