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Tax Cut Aimed At Luring Back LA Car Dealerships

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Claudia Peschiutta Claudia Peschiutta
Claudia Peschiutta is a general-assignment reporter at KNX 1070...
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LOS ANGELES (CBS) — Lawmakers on Thursday were hopeful that a City Council vote to eliminate a business tax on sales of new cars would lure in more revenue for the city.

KNX 1070’s Claudia Peschiutta reports officials have long blamed the tax for driving potential new dealerships out of the city.

The number of dealerships citywide has fallen sharply in recent years, with an estimated 52 new lots down from 147 back in 1986.

City Council members voted unanimously earlier this week to eliminate the gross receipts tax, which is required to be paid regardless of revenue and can range from $1.01 per $1,000 to $5.07 per $1,000 of sales receipts.

Councilman Eric Garcetti said the incentive to lure new dealerships should bring in about $5.4 million in sales tax, resulting in $720,000 more in net receipts after the $4.68 million in gross receipts tax has gone away.

“We would have only had to get five car dealerships back in this city for the sales tax generated in those five dealerships to cover the gross receipts tax for all of the remaining dealerships that are here,” said Garcetti.

The tax will be waived through 2020 unless lawmakers decide to eliminate the tax altogether.

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