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Friday, Sep 29, 2023


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Staff Reporter

The business community has complained loudly for years about the high cost of doing business in the City of Los Angeles particularly the high cost of paying the city’s business license tax, which is based on gross receipts.

But there’s a measure on the city’s ballot Tuesday, that if approved, would continue a 3.75 percent surtax on the much-criticized gross receipts tax and the business community has registered hardly a peep of opposition.

The measure, Proposition 7, is being officially opposed by the Los Angeles Area Chamber of Commerce. But no one not even the chamber took the trouble to file a ballot argument against the tax surcharge.

And no money was raised to mount an opposition campaign, according to the city Ethics Commission.

“I thought this was an issue that the Chamber of Commerce would be all over,” said Larry Kosmont, president of Kosmont & Associates Inc., which produces an annual survey comparing the cost of doing in business in California cities.

“When it comes to nitty-gritty fiscal issues, this is just not on everybody’s minds,” he said.

Chamber President Ezunial Burts acknowledged that his organization has done little to encourage voters to cast a “no” vote on the measure.

“There hasn’t been a great effort,” he said. “We have come out in opposition to this thing and tried to communicate that to our members.”

Burts said the surtax has not gotten a lot of attention from the business community because it is not a new tax, but a continuation of an existing one.

“It’s not the kind of thing that is placed in front of you on a day-to-day basis and allows you to identify it as a barrier,” Burts said.

David Lynn, the chamber’s program director, added that the city’s forthcoming tax equity study which is expected to deal with business taxes in a comprehensive way also has taken attention away from Proposition 7.

“The tax equity study, I think, has a much broader appeal,” Lynn said. “Part of the problem with this measure is it actually comes ahead of the tax equity study.”

Various businesses throughout the city, including a coalition of five health maintenance organizations, have threatened to leave L.A. unless their business license taxes are lowered.

The surtax was originally levied in 1983 at 7.5 percent, but was halved in 1994.

A June 1995 vote by the City Council kept the tax in place, but it is now going to voters for approval under the rules of Proposition 218, a state ballot measure passed in November of last year that requires voters to approve any general tax imposed, increased or extended after Jan. 1, 1995.

If Proposition 7 is not approved, the city would no longer be able to collect the surtax which effectively would mean a tax break for all the city’s businesses, albeit a modest one.

In his argument filed in favor of Proposition 7, City Clerk J. Michael Carey said rejection of the measure would force the city to come up with an additional $10 million a year for police and other general fund services.

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