Long Beach Sues California Over Controversial Sales Tax Hike

Long Beach, CA – March 27, 2025 – The City of Long Beach has taken legal action against the California Department of Tax and Fee Administration (CDTFA) in an effort to implement a disputed sales tax increase, even as it defends itself against a lawsuit from the Long Beach Reform Coalition (LBRC) challenging the legality of the tax hike.

• The City Council approved a quarter-cent tax increase, raising the sales tax to 10.75 percent, without voter approval.

• The California Department of Tax & Fee Administration (CDTFA) rejected the increase, stating it violates state law.

• Long Beach is now suing the CDTFA to enforce the tax, while LBRC continues its legal fight against the city.

At the heart of the issue is a proposed quarter-cent sales tax increase that would raise the city’s sales tax rate from 10.25% to 10.75%—a move the City Council approved without a direct vote from residents. The LBRC contends that the increase is unconstitutional under California law, which requires voter approval for local tax hikes.

In a surprising twist, the CDTFA has sided with LBRC’s legal position, stating in a Jan. 7, 2025, letter that Long Beach’s tax increase lacked voter authorization and could not be implemented. As a result, the state agency confirmed that the city’s sales tax rate would rise only to 10.5% on April 1, reflecting the previously approved Los Angeles County Measure A increase, but not the additional quarter-percent sought by the city.

Despite the CDTFA’s rejection, Long Beach has filed a lawsuit against the state tax authority, arguing that its interpretation of voter intent supports the higher tax rate. Meanwhile, LBRC continues to challenge the tax hike in court, creating what the coalition describes as a “two-front battle” over the city’s attempt to collect additional revenue.

“The City of Long Beach is now fighting against both its own residents and the State of California to push through an illegal tax increase,” said Ian Patton, Executive Director of the LBRC. “This move would place an extreme burden on local consumers, from basic goods to online purchases and even vehicle sales.”

The controversy has left local retailers in limbo, uncertain about what tax rate to apply when the new rates take effect on April 1. City officials acknowledged the confusion in a recent public handout but maintained that they are working with the CDTFA to determine the agency’s authority to collect the tax. However, public records reveal that the city had already filed suit against the CDTFA before making that statement.

Retailers and residents are caught in the confusion, unsure what tax rate to charge as the April 1 deadline approaches. If the city wins, Long Beach will have one of the highest sales tax rates in California. If it loses, officials may have to rethink their approach to raising revenue.

With legal battles on both fronts, Long Beach’s tax policy remains in flux, and the final outcome could have significant implications for residents and businesses alike.