Sales Tax Rate Will Go Up on April 1; Voters Approved Increase Via Measure E on November Ballot

The sales tax rate in West Hollywood is going up next week.

Effective on April 1, the sales tax in West Hollywood will go from 9.5% to 10.25%. The increase is a result of the passage of Measure E in the November election.

Measure E enacted a ¾-cent sale tax to address COVID-19 revenue shortfall and longer-term impacts to the economy from COVID-19. Measure E was approved by almost 75% of the voters – 14,852 votes for vs. 5,607 votes against.

West Hollywood is projected to lose as much as $35 million in revenue over the 2020 and 2021 fiscal years due to the coronavirus pandemic. That amounts to about a 20% decline in revenue.

The new tax rate could generate approximately $11 million annually. The city says it will use the funds to “prevent cuts to programs and services that are critical to residents and could otherwise help the City recover from the current crisis, such as protecting public health, working with local nonprofits to help community members in need, and helping local businesses survive.”

Under the previous 9.5% sales tax rate, the City of West Hollywood was receiving approximately 1% of that 9.5% sales tax rate. The remaining 8.5% of that 9.5% rate was allocated to other taxing entities including the state of California and Los Angeles County.

With the new 10.25% sales tax, 1.75% of the sales tax will go to the City of West Hollywood, while the other 8.5% will continue going to the state and county.

The maximum sales tax rate allowed in any jurisdiction in Los Angeles County is 10.25%.

During previous surveys, West Hollywood residents have indicated issues they consider important including addressing homelessness; expanding health and mental health services; retaining local businesses and jobs; keeping public areas clean and safe; maintaining HIV and AIDS health services; and supporting disaster preparedness. The City intends to use the extra tax revenue to help fund such programs.

The California Department of Tax and Administration has posted the special notice regarding the new Sales and Use Tax rates operative April 1. The special notice can be accessed  at  https://www.cdtfa.ca.gov/formspubs/L797.pdf. This special notice is being mailed to approximately 171,000 California taxpayers and emailed to 703,000 taxpayers by April 1.

For more information about the sales tax increase, please contact City of West Hollywood’s Revenue Manager, Annie Ruiz at (323) 848-6499 or at  [email protected].