(CTN News) – General Motors (GM) has taken legal action against the city of San Francisco, aiming to recover more than $100 million, alleging an unjustly inflated tax bill.
As reported by Reuters, GM has filed a lawsuit in California Superior Court, asserting that it was charged a higher tax amount than it should have been due to the inclusion of its Cruise self-driving car unit in the calculations. GM is seeking to reclaim $108 million, in addition to $13 million in penalties and interest.
GM argues that Cruise, which is based in San Francisco, operates independently from the parent company and generates minimal sales.
Therefore, it should not be considered when determining GM’s tax liabilities in a city where its presence is limited. According to the lawsuit, GM reported only approximately $677,000 worth of goods sold in San Francisco in 2022.
This legal action by GM raises concerns about the accuracy of the city’s tax calculations and highlights the strained relationship between the automaker and San Francisco.
The lawsuit contends that the California Government Code mandates fair taxation, ensuring that city taxes accurately reflect the extent of business conducted within its boundaries.
GM argues that the current tax calculations, especially those related to the Cruise unit, do not comply with the given mandate. Although the amount of money involved is only a small fraction of reported $156.7 billion in sales in 2022, this legal dispute poses a challenge for San Francisco.
The city is currently facing an $800 million budget deficit over the next two fiscal years due to economic challenges caused by the pandemic.
In response, Mayor London Breed has requested city agencies to implement 10 percent budget cuts in order to address this fiscal gap.
This legal action stems from an incident involving Cruise in San Francisco in October, which raised safety concerns and attracted regulatory scrutiny. As a result, Cruise decided to remove its U.S. cars from the roads, conduct a safety review, and reduce its staff by almost 25 percent nationwide.