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New car sales exempt from LA's business tax

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Car dealers who sell new vehicles in Los Angeles will no longer have to pay the city’s business tax, a policy change that Mayor Antonio Villaraigosa hopes will bring dealerships back into city limits.

The proposal to eliminate the gross receipts tax for new car dealerships was announced last November as part of an ongoing effort to make Los Angeles more attractive to the business community. Last year, Los Angeles received six times more money from dealerships’ sales taxes than from the business tax.

“The elimination of the business tax on the sale of new vehicles is the single most important thing the city can do to stop the migration of dealerships out of the city, to attract more dealers to locate here and to encourage those of us who are here to make investments in expansion,” said David Ellis, president of the Greater Los Angeles New Car Dealers Association.

In the last 25 years, 95 dealerships have left Los Angeles for neighboring communities. Today, the mayor signed the ordinance at a new KIA dealership in downtown. 

“Ending the auto dealer business tax is smart policy that will pay dividends for years to come. New dealerships mean new jobs for Angelenos and more revenue for our parks, libraries and police officers,” Villaraigosa said. 

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