Occupational and business license fees, which are levied for the purpose of producing general revenue, are essentially taxes as opposed to regulatory license fees. Kentucky courts have consistently held that cities have the power to impose monetary charges on businesses and occupations for the purpose of producing general revenue. As a result, both state statutes and court decisions have referred to them as taxes.
Occupational license taxes may be imposed as a percentage of gross earnings (payroll) on all persons working within the city or on gross receipts or net profits on all businesses within a city. (Sixth class cities may not levy this tax as a percent, only as a flat rate.) A flat annual rate may also be used by cities, often referred to as business license fees. Occupational and business license fees constitute a charge for the privilege of working in or conducting a business within a city.