Business Tax

The El Segundo City Council on Tuesday gave tentative approval to a new business tax package that will add $3.3 million in the next fiscal year to the $10 million in taxes paid by city businesses. The tax has the support of a majority of the council and the business community. In a departure from past battles over levies on industry in the city, the tax was crafted by city officials with the Chamber of Commerce. City revenues this year are $38 million.

Question: As a sole proprietor, I got a confusing business tax bill from the city of Los Angeles based on my state tax return. Do I have to pay? What forms do I need to file to avoid penalties for missed deadlines? Answer: Every business within the city of Los Angeles must obtain a "tax registration certificate" and renew it annually.

For 24 years, business owners in this city have had one unchanging regular expense: the cost of their license to operate in Thousand Oaks. Not only do the rates predate disco, they are the lowest in Ventura County. Now, acting on a recommendation from a citizens' committee, the Thousand Oaks City Council is considering upping the business tax by 45%, an increase that would put an estimated $438,000 more in city coffers annually. Last year the city made $1.1 million from the licensing fee.

When the Los Angeles City Council voted in November to legalize home-based businesses, another issue emerged. Many writers and artists who work at home found that they would have to pay city taxes. The city has offered a temporary amnesty for such businesses, but some of these home-based workers are seeking permanent exemptions. But others maintain that all home-based businesses have a responsibility to pay taxes.

The main proposals to reform Los Angeles' business tax would cost the city $95 million annually, about a fifth of the revenue from the gross receipts tax, according to a report released Wednesday by the city's Office of Finance. Citing the stiff price tag, the agency agreed with city leaders that some of the reforms should be delayed until 2006, and even then should be phased in over five or six years to soften the blow to the city budget.

Despite speeches by three business owners against the move, the City Council on Monday night moved a step closer to creating a special tax district to boost the downtown area. The council voted 7 to 0 to hold a public hearing March 2 on whether to create a "business improvement district" for downtown. Unless more than 50% of the business owners in the area protest, the city will create the new district and start collecting a tax from the downtown merchants.

The Los Angeles City Council voted Friday to scrap a manufacturing tax that will cost the city about $10 million in revenue annually and could have further financial ramifications. That decision stems from a lawsuit the city lost last year in which an appeals court ruled that the city discriminated against General Motors, which long operated an assembly plant in Panorama City, by forcing GM to pay both a seller's tax and a manufacturer's tax.

The City Council has approved a series of revisions to its controversial business license tax over the objections of some business owners who said the fees are unfair and will drive them out of town. "If you keep this tax, I'm not going to stay in Westminster," said Wayne Schell, a distributor of aerospace parts and equipment. "I will move." Last year, the council voted to replace the city's flat fee of $50 with a tax based on gross receipts.

The Los Angeles City Council created a task force Wednesday to draft criteria for awarding business tax cuts and development fee waivers for commercial and industrial construction projects. Some council members called for such a task force after the panel waived more than $1 million in fees and charges for construction of the Metropolitan Water District's new Downtown headquarters.

A proposed increase in Thousand Oaks' business tax was rejected when it failed to receive majority approval from City Council members earlier this week. The tax was to be raised by 45%, which would have boosted city revenues about $450,000 annually. Councilman Andy Fox, who supported the increase, had proposed that the extra money be used to pay for enhanced police and library services.