The City Council of the City of Santa Monica (“City”) placed Measure F (“Measure”) on the ballot. The Measure would adopt an ordinance amending the Santa Monica Municipal Code to update the City’s business license tax imposed on businesses operating within the City. The tax is generally imposed on annual gross receipts with non-cannabis tax rates ranging from $1.25 to $5.00 per $1,000. The City also imposes flat business licenses taxes ranging from $50 to $150 on certain business classifications.
The Measure increases a small business exemption and a disabled person exemption to $100,000 in annual gross receipts and provides for inflation-adjusted increases. The Measure clarifies business license tax and business license certificate exemptions. Additionally, the Measure reduces penalties and eliminates a back tax calculation applicable to new businesses.
The Measure reduces the tax rate for residential property owners with three or less rental units to $1.25 per $1,000. The Measure also lowers the tax rate for retailers and restaurants with annual gross receipts under $5,000,000 to $1.15 per $1,000.
The Measure eliminates an existing $25,000 tax cap for auto dealers and their sales and services will be taxed at the current rate of $1.25 per $1,000 for two years. In fiscal year 2027-28, auto dealer services will be taxed at a rate up to $3.00 per $1,000.
The Measure authorizes additional time for City audits when a business has failed to register or obtain a business license certificate. It also adds a four-year statute of limitations to collect any delinquent tax and provides for tolling in certain circumstances. The Measure authorizes the City to inspect books and records to determine compliance.
If the Measure passes, the new tax rates and other changes will be effective January 1, 2025, and will remain in effect until ended by voters.
Source: City Attorney’s Impartial Analysis of Measure F
