[SGVLUG] Villaraigosa signs measure to reduce Internet business taxes

[matti]

Man! sometimes you wonder what they were thinking
when the raised the tax rate in the first place!!

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Villaraigosa signs measure to reduce Internet business taxes
March 22, 2010 | 11:16 am
Los Angeles Mayor Antonio Villaraigosa on Monday signed a measure to cut business taxes for Internet-based firms, many of which last year saw their tax rate jump from the lowest in the city to the highest.

The change, unanimously approved by the City Council on March 5, will affect an estimated 1,400 businesses in Los Angeles.

Some of those companies had threatened to move out of the city if the tax rate was not reduced. Villaraigosa signed the ordinance at the Westside Internet firm Shopzilla, one of the companies that had considered relocating.

The city’s Office of Finance last year started to reclassify Internet-based firms into a higher business tax bracket. Until then, Internet companies were considered to be “multimedia” businesses and subject to a tax rate of $1.01 per $1,000 of gross receipts. Under the new classification, they were placed in the “business and professions” category, which has a tax rate of $5.07 per $1,000 of gross receipts.

Under the measure signed Monday, the city will create new tax classifications for Internet companies that will be subject to the same rate as multimedia firms, the lowest rate. The reduction will be retroactive to Jan. 1.

During the council debate over the measure, some members expressed concern about making the rate change retroactive, saying it would cost the city $3.4 million in revenue at a time when the city faces a $212-million shortfall.

-- Phil Willon at Los Angeles City Hall

http://latimesblogs.latimes.com/lanow/2010/03/villaraigosa-signs-measure-to-reduce-internet-business-taxes.html