City of L.A. To Reduce Top Rate of Gross Receipts Tax

by Gary Toebben

Today, the Los Angeles City Council will vote to reduce the top rate of the City’s Gross Receipts Tax. The action will lower the top rate from $5.07 per $1,000 in gross receipts to $4.75 on Jan. 1, 2016, $4.50 on Jan. 1, 2017 and $4.25 on Jan. 1, 2018.  The proposal was developed by Mayor Eric Garcetti, City Council President Herb Wesson and Budget Committee Chair Paul Krekorian. 

While this reduction in the Gross Receipts Tax is less aggressive than the plan recommended by the Business Tax Advisory Committee (BTAC) appointed by Mayor Villaraigosa and the City Council in 2010, it is a step in the right direction. It is a clear acknowledgement by the Mayor and City Council that having the highest Gross Receipts Tax in L.A. County and one of the highest in the United States is detrimental to recruiting new businesses and to retaining and growing existing businesses. 

Reducing the City’s Gross Receipts Tax has been a priority of the Chamber and other business organizations for more than a decade. The Chamber thanks Mayor Garcetti and the members of the City Council for taking this first step toward lowering this onerous and threatening tax on businesses who want to grow revenue and jobs in the City of L.A. We also thank the members of the Business Tax Advisory Committee for the years they spent researching the negative impacts of the Gross Receipts Tax and proposing solutions. 

The Business Tax Advisory Committee recommended phasing out the Gross Receipts Tax over a 15-year period. The Chamber will continue to support the reductions in the BTAC report, but today, we will remember that progress happens one step at a time, and this is progress.

And that's The Business Perspective.