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Los Angeles Mayor Reforms Tax Structure for Auto Dealers

During a press conference held at a downtown KIA dealership on Monday, Mayor Antonio Villaraigosa signed a city ordinance exempting new-car dealers from the city’s gross receipts tax, or business tax.

Last fall, Villaraigosa joined Councilmembers Eric Garcetti and Mitchell Englander in calling for a change to the tax structure for Los Angeles’ new-car dealers. The three city officials had determined that the business tax was hindering sales tax revenue generated by car dealerships. According to a press release, dealers generated six times as much in sales tax revenues as was generated through the business tax.

“Today we eliminate a scheme that taxed car dealerships even when they lost money. We’re sending a message that we want these revenue-generating businesses to be in Los Angeles,” said Garcetti, who co-authored the ordinance.

L.A. has lost 95 dealerships in the last 25 years, but that trend is reversing course. Downtown L.A.’s “Auto Row” now has twice the number of dealerships than it did seven years ago. KIA of Downtown L.A., the site of the press conference, is the second new auto dealer to open in the city in 18 months. That dealership is expected to bring in about $55 million in sales per year, an amount that will bring more than $400,000 in sales tax per year to the city’s general fund.

via F&I Magazine.

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