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L.A. eliminates business tax on new car dealerships

July 3, 2012 |  1:33 pm

A line of 2012 Chevrolet Cruze sedans sit at a dealership.

Hoping to lure vehicle sales back to Los Angeles, the City Council voted on Tuesday to eliminate the business tax for new car dealerships.

Officials say nearly 100 dealerships have left L.A. over the last 25 years, with some of them migrating to nearby cities such as Glendale, which exempts car dealers from the business tax.

Only about 50 car dealers remain in Los Angeles today.

"For too long, Los Angeles' business tax has driven auto dealers outside the city limits," Mayor Antonio Villaraigosa said in a statement released after the 12-0 Council vote. "By taxing our new car dealers, we are chasing away needed jobs and revenue."

The city reaped $3.2 million in gross receipts tax last year. But officials believe the loss of that revenue will be offset by new sales-tax revenue.

Councilman Eric Garcetti, who co-sponsored the motion, said the city has lost out on up to $60 million in potential sales tax that could have been generated each year had no dealerships left the city. "That's millions of dollars we could have used to fill potholes, that's millions of dollars that we could have used to staff fire stations," he said.


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— Kate Linthicum at Los Angeles City Hall


Photo: A line of 2012 Chevrolet Cruze sedans sit at a dealership. Credit: David Zalubowski / AP Photo