Apple Agrees to Pay Higher Taxes to have New Campus Approved

Apple has agreed to pay higher taxes to the city of Cupertino, Calif. to for the fast approval of its proposed new campus.

As part of the approved development agreement on Tuesday, the tech-giant Apple has decided to raise the amount of taxes it shells out to the city and the agreed increase is, in fact, a decrease in the size of a sales tax rebate Cupertino given to Apple yearly.

Cupertino has refunded almost 50 percent of the sales taxes it got from purchases of Apple products back to the company last year. Now, based on the terms of the new approved agreement, the city will only refund 35 percent of those sales taxes.

Mayor Orrin Mahoney of Cupertino said in an e-mail to L.A Times, “This item was one of many negotiated between Apple and the city of Cupertino as part of the development agreement. The Apple 2 campus is expected to have long-term impacts on the city with respect to traffic and other issues and Apple agreed to a financial offset for some of those impacts.”

The lesser refund won't put a noticeable difference in Apple's earnings statements, but it could make one to the city’s budget.

An Apple’s economic development report released last summer states that a total of $12.7 million was generated from the sales taxes in Cupertino in 2012 and based on the old agreement; Cupertino refunded $6.2 million to the company.

The agreement between Apple and the city began in 1997, the time when the company was on the verge of bankruptcy. In exchange of the monetary reimbursement, the iPad maker had agreed to assign more of its sales to the city of Cupertino.

The latest deal is scheduled to expire in 2014, but Apple has decided to renew the agreement as part of a deal for the proposed new campus.

A spokesperson for Apple refused to comment on the said federal agreement.

The city council has approved the project formally in October. However, a subsequent technical vote is set for Tuesday night to make that approval official.