The Los Angeles City Council is considering seven additional ways to raise revenue with three proposals set to be discussed Tuesday with the intent of placing them on the June primary election ballot.
The City Council will consider an increase in two existing taxes: transient occupancy, also referred to as the “hotel tax,” and parking occupancy. The third proposal would establish a tax on unpermitted cannabis businesses.
City Administrative Officer Matt Szabo and Diana Mangioglu, the city treasurer and director of finance, have explored increasing the transient occupancy tax, or TOT, a tax on the right to occupy space for lodging.
The tax covers hotel and motel rooms, short-term rentals, and hostels. TOT stands at 14% of the paid total, including all fees and charges that are associated with the occupancy of the space.
Malibu, Santa Monica and Beverly Hills have a higher TOT at 15% than Los Angeles.
The proposal aims to increase the tax rate from 14% to 16%, codifying the taxability of online travel companies’ markups and other changes. City officials projected the change could generate an estimated $45.3 million in additional annual revenue.
The proposal would also establish a temporary 2% supplementary charge, effective from January 2027 to December 2028, which aims to capitalize on the region’s tourism for the 2027 Super Bowl and 2028 Olympics. This additional charge would see TOT at 18%, generating an additional $89.3 million.
Hotels with 50 rooms or more would be assessed an additional 2% by the Los Angeles Tourism Marketing District, which would place a 20% TOT on these hotels.
The parking occupancy tax is a fee on the usage of space for parking vehicles, which is applied across all paid parking except for parking with a person’s residence and public parking meters. The rate stands at 10% of the total parking charge.
Szabo and Mangioglu proposed increasing the parking tax by 5% and it would generate $67.3 million. Officials argued this increase would incentivize more people to use public transportation or other transport options.
The 15% would be in a range of Burbank’s 12% and Santa Monica’s 18% parking occupancy tax. Pasadena, Glendale and Long Beach are among the cities which do not have a similar tax.
Szabo and Mangioglu have also proposed a so-called cannabis business parity tax measure with the aim of amending the tax code to ensure unlicensed marijuana businesses are subject to the same liability as licensed operators.
The Los Angeles Office of Finance said it would close a regulatory loophole, and allow enforcement and collection of the tax on both licensed and unlicensed cannabis businesses.
The Office of Finance projected the tax would generate $60 million to $80 million annually, though revenue would likely diminish over time as enforcement and closure of illegal businesses occur.
Council members will decide which proposals to advance, and instruct the City Attorney’s Office to draft ballot language to place them on the June ballot.
The City Council may also look to explore four other tax measures — major events, shared ride, vacancy and retail delivery — in the coming months to place on the November ballot.
The major event tax would impose a 6% tax on tickets for events with 5,000 or more attendees.
The shared ride tax would place an additional fee on Uber, Lyft and taxi fares. A vacancy tax would impose tax on vacant properties with the intent to encourage owners to rent or sell.
The retail delivery fee would impose a $1 flat fee on delivered goods to offset road wear-and-tear, according to a report from Szabo.