L.A. officials move closer to lowering tax on business gross receipts

Los Angeles Mayor Eric Garcetti, here at center left at a recent City Council meeting, has said since taking office in 2013 that he wants to reduce the business tax to stimulate economic growth in the city.
(Luis Sinco / Los Angeles Times)

Los Angeles lawmakers took steps Monday toward cutting the city’s business tax rate starting in 2016.

Business leaders say L.A.'s business tax rate is too high and puts local firms at a competitive disadvantage. Since taking office in 2013, L.A. Mayor Eric Garcetti has said he wants to reduce the tax to stimulate economic growth in the city.

But facing a $242-million budget shortfall, Garcetti included in his 2014-15 budget -- approved last year -- a three-year scaling back of the tax rate that wouldn’t begin until 2016.

Those changes, which would diminish city revenue by $45 million by 2018, need to be formally approved by the City Council.


On Monday, the council’s budget committee, headed by Councilman Paul Krekorian, approved the proposed reduction to the tax rate and sent it to the full council for a vote.

If approved, the business tax rate would drop from $5.07 for each $1,000 of gross receipts to $4.75 for each $1,000 in 2016. The following year, the tax rate would be cut again to $4.50 for each $1,000 of gross receipts. From 2018 onwards, the tax rate would be $4.25 per $1,000 of gross receipts.

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