LODI, Calif. — After 28 years, the city of Lodi says that it has stopped collecting an illegal tax. City officials announced on Sept. 18 that their business license tax did not fall within state laws.
In 1995, the city passed an ordinance allowing for the tax but a year later, California voters passed Proposition 218. The proposition required voters to approve new, local taxes and most charges to property owners.
It applied to all taxes passed without a public vote in 1995 and 1996.
While the city did not disclose how much money from the tax has been collected over the past 28 years, the Lodi District Chamber of Commerce said in a statement that it could have been as much as $566 per business.
"The Chamber of Commerce does not support unnecessary and especially illegitimate taxes that put our business community at a competitive disadvantage versus surrounding municipalities. Although this tax specifically was not burdensome for most businesses, the totality of the tax and regulatory burden California businesses face is already crushing," the statement said. " The Chamber supports sound and transparent fiscal policy. Our hope is that in the future, the City will be more communicative of any similar actions that they plan to undertake, and will utilize the Chamber to assist in informing and preparing our business community."
State laws require the city to refund all of the business license tax payments made in the past twelve months. Officials estimate that the refunds will total $1.8 million.
"No application for a refund will be needed, and refunds will be mailed to businesses at their addresses in the City’s records within the next thirty to sixty days," the city of Lodi said in a Facebook post. "The City apologizes for this error and will work to make all refunds quickly."
According to a spokesperson for the city, Lodi officials have not begun the process of figuring out how to recoup lost revenue from the tax and there are currently no plans to place the ordinance on future ballots.
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