In an effort to attract new car dealerships to Los Angeles and increase sales tax revenue to pay for public services, the City Council voted Tuesday to eliminate a business tax on new car sales.
City officials say the city’s business tax, which brings in about $4 million per year, is the main reason 95 car dealerships moved out of the city over the last 25 years.
The council voted 12-0 in favor of the plan by Mayor Antonio Villaraigosa and carried in the council by Mitchell Englander and Eric Garcetti.
The flight of car dealerships caused the city to lose out on about $60 million per year in sales tax revenue, Englander said.
There are an estimated 52 new car dealers in the city today that generate about $32 million in sales tax revenue annually, according to the mayor’s office.
“For too long, Los Angeles’ business tax has driven auto dealers outside the city limits. We are finally reforming the way we tax auto dealers so that we can bring more jobs and more sales tax to our city,” Villaraigosa said in a statement released after the vote.