No city tax rebate for out-of-town purchases

The City Council decided not to give a tax break to residents whose purchases out of town have fallen under the half-cent special sales tax that went into effect July 1.

The tax is designed to offset the costs of the Bluebird Canyon landslide and was approved by voters last spring — before the city learned it would receive federal aid to foot the bill for repairs to the slide-damaged infrastructure.

The council rejected a proposal Tuesday by City Manager Ken Frank to offer rebates to residents who pay the tax on big-ticket items they purchase outside of Laguna through sellers who have outlets in California — or who have items delivered from an out-of-town source to their Laguna Beach homes.

“It was our understanding that the state would administer the half-cent tax like it does the regular sales tax,” Frank said.

That assumption was wrong.

The special tax officially is a “sales and use” tax, which can be imposed on purchases outside the taxing jurisdiction.

“For instance, if a resident buys a $40,000 car in Irvine, they would pay an extra $200,” Frank said.

The council voted 3-2 to reject Frank’s recommendation, with council members Toni Iseman and Elizabeth Pearson-Schneider opposed.

— Barbara Diamond