Politics, government and public life for Southern California

LA's business tax holiday extended to 2015

City Councilman Paul Krekorian

Andres Aguila/KPCC

The Los Angeles City Council voted 10-2 to extend a policy that exempts new businesses from paying a gross receipts tax for their first three years of operation. Councilman Paul Krekorian, chair of Budget and Finance, voted against the extension, saying there needs to be more study of the economic impact.

New businesses will continue to get a tax break from the City of Los Angeles.

The City Council on Tuesday voted to extend its policy of exempting new businesses from paying a gross receipts tax for their first three years of operation. The exemption will apply to businesses that begin operating before the end of 2015.

In an effort to attract new businesses to Los Angeles, the City Council agreed three years ago to waive the tax through 2012, without a cap on how much a company earns. Prior to that ordinance, it was the city’s policy to waive the gross receipts tax for two years for companies making less than $500,000. 

Councilman Mitch Englander said the extension is a step toward eliminating the gross receipts tax, which generates more than $400 million a year for the city. The tax is frequently cited as a sign that Los Angeles is not business-friendly. The theory is that, by eliminating the tax, more new businesses will flock here. 

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