For the first time, more than half of Los Angeles County’s cities are considered high cost for taxes and fees on businesses, according to an annual survey being released this week. And with more tax increases and minimum-wage hikes in the offing, the cost burden on local businesses is only going to get worse.
This year’s Kosmont-Rose Institute Cost of Doing Business Survey classified 45 of the county’s 88 cities as either “high cost” or “very high cost” when it comes to taxes and fees businesses must pay. That’s up from 44 last year and continues a steadily increasing trend.
Even worse, seven cities in the county, including Los Angeles, Santa Monica and Beverly Hills, are now ranked among the 20 most expensive cities in the Western United States.
“We keep seeing cities in Los Angeles County creeping up on the cost scale,” said L.A. economic development consultant and survey co-author Larry Kosmont.
What’s more, Kosmont said, at least two local cities are considering tax increases this year or next. Los Angeles just passed a hefty hike in the minimum wage, a move that several other jurisdictions are considering following.
“We’re moving in the wrong direction: Instead of reducing business operating costs to be more competitive, cities keep piling the costs on,” Kosmont said.
L.A. restaurateur George Abou-Daoud has experienced these rising costs at the eight eateries of his Bowery Street Restaurants. He said it’s not just voter-approved taxes, but also government fees, such as a new $2,000 charge he pays for each annual renewal of a permit to sell alcohol. And this is before the city’s enactment this month of an increase in the minimum wage to $15 an hour by 2020 – a move Abou-Daoud vociferously opposed.
“You’re always seeing more taxes and more fees, never the other way around,” he said. “It’s easy to see why businesses that can leave do leave the city. The costs of doing business are so extravagant here.”
The annual survey is produced by economic development consultants Kosmont Cos. of Los Angeles and the Rose Institute of State and Local Government at Claremont-McKenna College in Claremont. It looks at the costs of operating a business – focusing especially on taxes and fees – in 305 cities throughout nine Western states.
Businesses considering expansion or relocation often use the survey to compare operating costs in different cities. Since its launch 19 years ago, the survey has also become an essential tool for recruiters in other states as they come calling on California businesses.
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