The City of West Hollywood is reminding local shoppers and businesses that a sales tax rate increase will go into effect on Thursday, April 1, 2021. The sales tax rate in the City of West Hollywood will increase from 9.50 percent to 10.25 percent.
In the November 2020 General Municipal Election, West Hollywood voters approved Measure E, which enacts a ¾-cent sales tax to address the COVID-19 revenue shortfall and longer-term impacts to the economy from COVID-19. The additional tax will keep collected tax dollars local to support local needs. Businesses are being reminded to update point-of-sale (POS) systems, accordingly.
A city press release states that the City of West Hollywood has been affected by the significant financial impacts of COVID-19. The City is projected to lose as much as $35 million in revenue over the 2020 and 2021 fiscal years, equal to approximately a 20% decline in revenue. The new tax rate could generate approximately $11 million annually. Measure E funds will help 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.
Currently, the maximum sales tax rate allowed in any jurisdiction in Los Angeles County is 10.25 percent. The sales tax rate in West Hollywood, prior to the implementation of Measure E, had been set at 9.5 percent. The Measure E sales tax increase ensures that new ¾-cent sales tax revenues are kept local. Under the 9.5 percent sales tax rate, the City of West Hollywood was receiving approximately one percent of the 9.5 percent sales tax rate and the remaining 8.5 percent is allocated to other taxing entities including the State of California and Los Angeles County.
As the City of West Hollywood continues to respond to a shortfall in revenue due to the COVID-19 pandemic, Measure E will help the City maintain services West Hollywood residents have indicated are 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 California Department of Tax and Administration has posted the special notice regarding the new Sales and Use Tax rates operative April 1, 2021. The special notice can be located 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, 2021.
Additional information about Measure E is available on the City of West Hollywood’s website, including links to FAQs and a Community Presentation.
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].