Council Votes to Extend Lower Tax Rate for Internet Businesses

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The Los Angeles City Council on Wednesday voted to extend the major reduction in business tax rates for Internet companies for four more years.

The unanimous vote extended the reduced tax rate of $1.01 for every $1,000 in gross receipts for Internet companies that was first enacted four years ago. The vote extended the break granted four years ago, when several companies threatened to decamp from the city if the rate for Internet-based businesses was not lowered from $5.07 for every $1,000 in gross receipts.

With the reduced rate set to expire at the end of this year, Councilmen Mike Bonin and Bob Blumenfield had introduced a one-year extension. A council committee amended the proposal to carry the extension through to the end of 2018.

With today’s 15-0 vote, the extension measure goes to Mayor Eric Garcetti for his expected signature.

“There is tremendous benefit for all of Los Angeles when smart, creative and innovative technology companies choose to start businesses in LA,” Bonin said in a statement after the vote. “Incentives like this have helped draw startups to the Southland.”

Meanwhile, Garcetti has proposed eliminating the gross receipts tax and replacing it with another, less burdensome business tax. The move is part of the mayor’s effort to gain business support for his proposal to raise the citywide minimum wage to $13.25 an hour by 2017.

Check out the Business Journal’s previous coverage of the debate on extending the reduced Internet business taxation rates here.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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