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Villaraigosa urges 3-year break on business tax for firms moving to L.A.

October 25, 2011 |  6:14 pm

Los Angeles Mayor Antonio Villaraigosa speaks at the grand opening of the North American headquarters of Chinese carmaker BYD Co. in Los Angeles on Oct. 24, 2011. Credit: Jonathan Alcorn / Bloomberg
In another bid to buff the city’s appeal for businesses looking for a new home, Mayor Antonio Villaraigosa proposed making permanent a program that gives companies moving into Los Angeles a three-year break on paying the business tax on their gross receipts.

Villaraigosa has been pressing an agenda intended to perk up the economy and create jobs. He predicted the City Council would sign on. “I think there’s a lot of support for it,” he said. “Everybody on the council has said they want to reduce or eliminate the gross receipts tax.”

The council just adopted a program to give local businesses a competitive edge when bidding on city contracts. The idea, which came out of the mayor’s office, is to help level the playing field for Los Angeles companies, which face higher costs of doing business.

Council President Eric Garcetti introduced a motion earlier this month with two councilmen to extend the new business tax break until 2015, but said he supports making it permanent. “Hopefully, it will give us so much momentum that we’ll have to do it for everybody,” he said.

The mayor’s decision comes more than a month after an advisory committee appointed last year by the council and the mayor made the same recommendation. 

The mayor, Garcetti and other council members routinely bemoan the city’s business tax as a disincentive for companies to move to L.A. “It’s a job-killer. It chases businesses away,” Garcetti said. “And if L.A. is going to work again, we’ve got to not just reduce but eliminate it.”

The mayor touted his latest business-friendly proposal in a speech to the United Chamber of Commerce Annual Mayor’s Luncheon in Woodland Hills.

Between 1980 and 2010, the city’s population grew by 28%, but the number of jobs declined by 10%, according to the city’s Business Tax Advisory Committee.

Villaraigosa said the current tax holiday, which has been in place since 2010 but is scheduled to expire in 2012, has been a success. “It’s bringing in revenue,” he said.

The mayor in his speeches on the economy regularly ticks off a list of companies he says have moved operations to the city partly because they do not have to pay the business tax. Among them are: electric vehicle companies BYD and Coda; high-tech firms Google, Blackline Software and Telscape Communications; mega-retailers Costco and Target; the Gensler architecture firm; Beverly Hills BMW; Farmer's Insurance; Lucky Brand jeans and Tom’s Shoes.

L.A.’s business tax ranges from $1.01 to $5.07 per $1,000 of gross receipts. On the high end, it is much steeper than that charged by the surrounding cities.

“We are the most uncompetitive city,” Villaraigosa said. “I’m not doing one of those things where I’m saying, ‘No taxes,’ I’m just saying, 'That’s a dumb tax.' ”

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-- John Hoeffel at Los Angeles City Hall

Photo: Los Angeles Mayor Antonio Villaraigosa speaks at the grand opening of the North American headquarters of Chinese carmaker BYD Co. in Los Angeles on Oct. 24, 2011. Credit: Jonathan Alcorn / Bloomberg

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