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Measure LR
Paramount City Services, Business License Tax Reform Measure
The City of Paramount plans for the future, maintaining and enhancing services that Paramount residents use every day including public safety, 911 response, gang prevention, keeping parks and public places safe and clean. Paramount also reviews and updates its City revenue collection processes to ensure equity and ongoing funds for these services.
Currently, some of the City’s essential services are funded by business license taxes paid directly into the general fund. The current structure for business license taxes is outdated, existing from before 1974, and establishes the tax based on the number of employees. This structure means larger businesses are paying less on average per employee and smaller businesses are paying more. Small businesses make up 52% of all businesses operating in the City. Based on the City’s tax rate study, changing the tax structure from number of employees to a percentage of gross receipts would achieve a balance for businesses.
Proposed Tax Rate Structure
All businesses in the following categories would pay their business license tax based on a percentage of gross receipts as specified below.
- Retail-related business and General Business
- Taxed at the rate of $.30 per $1,000 gross receipts
- Professional Services
- Taxed rate of $.70 per $1,000 gross receipts
- Rental
- Taxed at the rate of $.70 per per $1,000 gross receipts
- Services
- Taxed at the rate of $.40 per per $1,000 gross receipts
- Contractors
- Taxed at the rate of $.40 per per $1,000 gross receipts
- Long-Term Medical Care Facilities
- Taxed at the rate of $.35 per per $1,000 gross receipts
Swap meets and businesses in the solid waste/refuse sections will continue to pay their share under their current business license structure.
If approved, the new tax rate structure would go into effect on January 1, 2025.
If the measure passes to change the tax structure to be gross receipts based, more than 75% of small businesses would pay a lower tax than what they are currently paying now while larger businesses would pay a higher business license tax due to their larger gross receipts.
On Tuesday, July 23, 2024, the Paramount City Council adopted a resolution to place the Paramount City Services, Business License Tax Reform Measure on the November 2024 ballot. This measure, if adopted by voters, will revise the existing business license tax structure to create a more equitable tax for small businesses, giving them a better chance to thrive while ensuring that large businesses contribute their fair share to the City’s revenue.
This measure may result in higher taxes for larger businesses. However, the measure does not result in any tax to residents.
Approval of the measure requires the support of at least two-thirds of voters. If passed, the revenues collected from the revised business license taxes could generate up to $350,000 annually in additional funds.
As Paramount continues to grow, we must increase revenue resources to keep up with the high standards that the City aims to keep.
The increase in these funds will be allocated to the general fund and will support essential governmental services like:
- Public Safety
- Gang Prevention Program
- 911 Emergency Response
- Parks and Public Spaces
- Street Maintenance
- After-School Programs
Residents will have a chance to vote on the Paramount City Services, Business License Tax Reform Measure at the ballot box in November 2024 during the General Election. The measure will not pass unless 2/3 of the voters support the measure.
FAQs
Will this measure increase taxes for residents?
No, the measure will not result in tax increases for residents. It solely focuses on restructuring the business license tax for businesses operating within the city.
How will the funds from the revised business license tax be used?
The additional revenues from the restructured tax will support various essential governmental services, including public safety, gang prevention programs, 911 emergency response, maintaining public spaces, and after-school programming.
What controls are in place to monitor the use of such funds?
The measure provides for independent annual audits with information available to the public.
Why is the City proposing this measure now?
The City has two reasons for acting now: the first is to ensure a fair distribution of the tax burden among businesses and provide reduced taxes for small businesses who are paying a larger share now. The second reason is to generate additional revenue to continue to fund essential services that benefit the entire community.
How will this measure impact small businesses?
If approved, the measure is designed to provide a more equitable tax structure to help small businesses by reducing their tax burden, which may give small businesses a better opportunity to thrive within Paramount. Larger businesses may pay more based on their higher gross receipts. On average, the proposed structure is estimated to reduce the annual business license fee by approximately $107 for a majority of the small businesses.
What happens if the measure does not pass?
If the measure does not pass, the existing business license tax structure will remain unchanged and City revenues will not increase from this source.
How can I get more information about the measure?
The language of the measure is posted on the City’s website at https://www.paramountcity.com/BusinessLicenseReform. You also can contact the Administrative Services Department at 562-220-2027. Information is available in English and Spanish. The measure includes all provisions regarding the current collection of business license taxes. Please view the City website or contact the City for more detailed information.
How will residents be able to vote on this Paramount City Services, Business License Tax Reform Measure?
You can cast your vote at your Los Angeles County voting center or mail in your ballot for the November 5, 2024, General Election. For more information about voting in Los Angeles County, please visit lacounty.gov/government/elections-voting.
