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VIDEO: Mayor Signs Big Tax Break for Car Dealers

Officials say the money they lose from the gross receipts tax will be offset by the extra sales tax.

With the stroke of a pen Monday, Mayor Antonio Villarigosa eliminated the which has driven dozens of car dealerships, jobs and sales tax revenue out of Los Angeles and into neighboring cities.

"Those are jobs we want to keep," said Councilman Eric Garcetti. "We want you to be able to support your families. We want you to be able to go out and spend that money in our restaurants."

“We’ve been  out of the city of Los Angeles for many years,” Councilman Mitch Englander said last week.

Twenty-five years ago, there were 147 new auto dealers in Los Angeles. Today there are only 52.

Englander, Garcetti and Villaraigosa called for the tax break during a news conference last November to announce that Beverly Hills Porsche would move into the city.

"With the savings our dealerships realize from the elimination of the business tax, we'll hire and train new employees, invest in equipment and infrastructure, and continue to give back and support our local communities," Lenny Sage, of the Sage Automotive Group, said at his new Kia dealership where the signing took place.

Officials say the money they lose from the gross receipts tax will be offset by the extra sales tax.

See the whole story and KABC7 video here.

Allan July 10, 2012 at 01:14 PM
So does that mean that those dealerships that are currently doing business in the city will not have to pay the gross receipts tax. I'm far from good at math, but my gut says that something doesn't compute. In fact, it is my understanding that when dealers outside of Los Angeles sold to residents of Los Angeles, the sales tax for Los Angeles would have applied.
Lenny Sage July 10, 2012 at 02:57 PM
This is not a issue of sales tax, rather the "gross reciepts tax", which is an additional tax that those dealers outside of Los Angeles (ie, Glendale) do not pay. It is equivalent to just over 1% of the the total sales of is dealership (as well as other businesses doing business in LA). The average dealership pays approx $80k a year - this is in addition to the sales tax the dealers already contribute.
L. Sandler July 10, 2012 at 04:40 PM
So, then, what is the "extra sales tax" that they mention? Does that mean that the buyer will be picking up that tab??

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