Businesses Seen as Easy Tax Targets: ‘They Don’t Vote’

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Local businesses are once again in the crosshairs as 10 measures increasing taxes or fees they pay are going to voters next month in seven cities and Los Angeles County.

Sales tax increases are up for voter approval on Nov. 6 in three cities: Commerce, Culver City and La Mirada. Pomona residents will be deciding whether to increase three taxes paid at least in part by businesses: the hotel bed tax, a parcel tax and the real estate transaction tax.

Meanwhile, Bellflower voters will weigh whether to increase the tax on utility users, while voters in Artesia will consider whether to raise the business license tax on companies with more than $150,000 in gross annual receipts.

In the most controversial local tax measure, voters in El Monte will consider whether to levy a tax of a penny per ounce on sugary drinks sold in the city, as reported by the Business Journal in August.

On top of all this, voters countywide will decide whether to extend for another 30 years a half-cent increase in the sales tax to fund transportation projects; the current increase is set to expire in 2039.

These measures reflect hardships faced by the county and cities as they struggle with a triple whammy of a stubbornly slow economy, rising health care and pension costs, and the dissolution of redevelopment agencies.

The hardships have been dramatic. Stockton and San Bernardino have filed for bankruptcy protection, while Moody’s Investors Service on Oct. 9 placed 18 California cities on its watch list for possible credit downgrades, including the L.A. cities of Downey, Glendale, Inglewood, Long Beach, Palmdale and Santa Monica.

“Cities are getting desperate for revenue and businesses are the easiest place to turn to because they don’t vote,” said Larry Kosmont, an economic development consultant in Los Angeles.

This trend is taking its toll on the attitudes of local business owners and executives.

“Increases in taxes and fees are now the No. 1 concern of our members,” said Tracy Rafter, chief executive of the Los Angeles County Business Federation, or BizFed, which represents more than 100 business groups in the county. The federation recently surveyed employers among these business groups to gauge their attitudes on doing business in Los Angeles.

“Everyone can feel that cities are trying to get more money out of a shrinking pot and they are turning more to taxes and fees on businesses,” Rafter said. “This is a trend that has been gathering steam at every level of government: city, county, state and federal.”

– Howard Fine

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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