Council OKs Hike in Tax on Businesses
The Los Angeles City Council voted Tuesday to increase taxes on local businesses by 2.5%, putting in place the last piece of a $59-million tax package that will affect everyone from suburban commuters to downtown merchants.
The council approved, 12 to 1, a 10% gross-receipts tax on businesses that is expected to raise $27 million annually for the city, which is facing its worst financial crisis in years, according to officials.
For the record:
12:00 a.m. Oct. 6, 1990 For the Record
Los Angeles Times Saturday October 6, 1990 Home Edition Metro Part B Page 2 Column 6 Metro Desk 2 inches; 58 words Type of Material: Correction
Business tax--The terms of a new business tax approved by the Los Angeles City Council were incorrectly described in Times article on Aug. 29. The council passed a 10% tax rate increase over the current rates, which range from $1.075 to $5.375 per $1,000 of gross receipts. The new rates range from $1.1825 to $5.9125. The tax applies to gross receipts for all of 1990 and payments are due at the end of February, 1991.
The tax will replace the 7.5% surcharge now levied, and will be based on a business’s total annual revenue, said Vallee Bunting, a spokeswoman for the mayor.
Councilman Ernani Bernardi cast the lone negative vote.
The business tax represents a significant chunk of a $59.3-million revenue package approved by the council in May as part of the city’s 1990-91 budget. Other key components included a 10% parking tax that went into effect in August, and a doubling of a special levy that pays for trash trucks.
“It’s been my philosophy and that of the other council members that the financial burden of the city should be balanced equally between business, industry and residential taxpayers,” said Councilman Zev Yaroslavsky, chairman of the Finance and Revenue Committee. “The city is faced with a financial crisis and it necessitates the raising of revenue and cutting of spending.”
James R. Hunter, president of the Central City Assn. that counts Arco, Bank of America and other major downtown businesses among its members, said the tax increase will be felt sooner or later by customers.
“I think some of this will show up in retail prices,” said Hunter. “In certain industries it will be months, in others it will be more immediate.”
Hunter said it is better to raise taxes than to continue to cut funding for vital city services. “This is a terrible dilemma for both the city and private industry . . . but provision of city services is important,” he said. “I’m not certain we could do with less--we need fire services, and social services have been cut to the bone.”
The tax will go into effect after it is signed by the mayor.
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