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A group of business leaders filed papers on Wednesday for a voting measure to abolish the Los Angeles receipt general tax, not only providing some financial relief to local employers, but also piercing a $800 million hole in the city’s budget.
The proposed measure, called the “Los Angeles Cost of Living Relief Initiative,” removes taxes levied on a huge number of companies, including entertainment companies, childcare providers, law firms, accountants, medical businesses, nightclubs, and delivery companies.
Supporters said that eliminating taxes that have long been avoided by the business community will address economic issues in the city, create jobs, allow businesses to stay in the city, and “helps make the economy more affordable for all Angeleno.”
Central City Assn is a downtown-based business group. “We are pleased to announce that we are committed to providing a range of services to our customers,” said Nella McOsker, president and CEO of the company.
Makoscar, one of five business leaders who signed the vote proposal, said city officials have “disregarded the petitions of small businesses over the years.” As a result, she said many restaurants and other facilities have been closed, including Maya Theatre.
Submitting the voting proposal promptly issued an alarm at city hall, and authorities recently signed a plan to fire hundreds of city workers to balance this year’s budget. The city’s business tax generates more than $800 million a year for the General Fund. This is part of the budget you pay for police patrols, firefighters, paramedic responses and other core services.
“Public safety is paid almost exclusively by the General Fund,” city manager Matt Sabo said in an email to the Times. “This measure is an attack on public safety. Proponents of this measure are directly responsible for reducing police or fire department staffing in half if it passes.”
McOsker asked about LA’s financial difficulties, saying the city is still struggling with a $1 billion shortfall this year and has managed to balance its budget. She is the daughter of City Councilman Tim Makosker, who will be on the five-person budget committee.
The proposed measures are supported by executives and board members from various groups, including the Los Angeles Regional Chamber of Commerce, the San Fernando Valley Chamber of Commerce, VICA, Valley Industry and Commercial ASSN.
VICA President Stuart Waldman said the city’s economy has declined amid rising taxes, increased urban costs and new regulations. The latest is an ordinance that hikes minimum wages for hotel employees and workers at Los Angeles International Airport to $30 an hour by 2028, which was approved by the city council for objections from business leaders.
“We’re usually in defense,” said Waldman, who also signed the vote proposal. “We decided it was time to attack.”
The business tax proposal is part of a massive voting battle that is taking place between businesses and organized labor this year.
Last month, a group of airlines and hotel industry organisations submitted around 140,000 signatures for the proposed voting law aimed at overturning newly approved hotels and loose minimum wages. LA County Election Authorities are currently confirming these signatures.
The united local 11, representing hotel employees, responded with a package of unique measures. Citywide elections are required regarding the construction or expansion of hotels, sports stadiums, concert halls and other venues. Another will raise the minimum wage for all workers in the city to the level of staff at hotels and airports.
The other two measures from the unity here aim to be businesses that pay more than 100 times the median employee in LA.
Councillor Katie Yaroslavski, who heads the council’s budget committee, said the ongoing voting battle is “escalating in a way that’s detached from the actual job of running a city recklessly.” Yaroslavsky said in a statement that the fight is “opportunistic and needs to be stopped.”
“We’ve closed our $1 billion budget gap and the basic services are already very nervous,” she said. “We don’t fix it by removing one of our biggest revenue streams without a plan to replace it. We need to fix the broken one, and it needs to work together to provide a real solution.”
Joss Marcus, a spokesman for the City of Los Angeles Clerk, said supporters of the latest voting action must gather around 140,000 valid signatures to qualify. The next city election will be in June 2026. Makosker said she believes that for her, state law sets a lower threshold (44,000) for measures that would result in tax elimination.
Industry leaders have long been denounced LA’s business tax. This is not profitable, but is levied on receipts brought in, even if the company is suffering from financial losses.
Former Mayor Eric Garcetti argued that he would eliminate taxes more than a decade ago, putting the city’s economy at a competitive disadvantage. Once he took office, he was able to reduce it. That’s amid concern that abolition completely would cause reductions in urban services.
Organizers of the latest proposal said they would not withdraw business taxes on the sale of cannabis or medical marijuana that have been approved individually by voters.
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