LOS ANGELES (CBS) — New car dealers are getting a break from Los Angeles’ business tax, a move that officials hope will lure dealerships back to the city.

The city of Los Angeles has lost 100 car dealerships since 1986, thanks to the city’s gross receipts tax, which has essentially been taxing new car sales twice – with the sales tax and the gross receipts tax.

The city’s gross receipts tax is $1.27 per $1,000 value of the item taxed, according to the LA Office of Finance.

One way to stop that, Villaraigosa reasoned, was to exempt new car dealers from the business tax, KNX 1070’s Jon Baird reports.

Los Angeles has been losing its dealerships to neighboring cities, like Burbank and Glendale,that have lower business taxes on new car lots – or none at all.

Officials believe the exemption will bring in a lot more sales tax revenue, and that will easily offset the loss in the business tax monies.

“Los Angeles is the car capital of the world. And yet, we weren’t acting like it,” Councilman Eric Garcetti said.


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