WOODLAND HILLS—In a speech to the United Chamber of Commerce Annual Mayor’s Luncheon in Woodland Hills, Los Angeles Mayor Antonio Villaraigosa suggested that the three-year tax holiday for new businesses should be made permanent. The policy was put into place in 2010 and is set to expire in 2012.

L.A. Mayor Antonio Villaraigosa. Photo courtesy of his office.

Mayor Villaraigosa stated, “The business tax holiday is a proven tool for bringing businesses to Los Angeles and generating job. So today, for the first time, I am calling on the City Council to make the three year tax holiday for new businesses permanent. There should be no expiration date on this common-sense, job-creating policy.”

The policy so far has attracted several companies to Los Angeles. Companies such as Google, BYD, Beverly Hills BMW, Costco, Farmer’s Insurance, Lucky Brand, Target, Blackline Software, Tom’s Shoes, Gensler, Coda as well as Telscape Communications have moved offices to L.A. thanks in part to the tax holiday.

This potential job creating policy already has its supporters on the Los Angeles City Council. Councilmembers Mitch Englander and Tom LaBonge, along with Council President Eric Garcetti, have already called for an extension of the policy to run until 2015.

Mayor Villaraigosa later commented on the elimination of Los Angeles' business tax, saying, “A recent study shows the immediate, complete elimination of the tax will cost the City hundreds of millions of dollars during the worst economy of our generation. I encourage the Council to take an aggressive and thoughtful approach to increase economic development and economic stability for the City. The Business Tax Holiday has done just that by incentivizing job creators to move to Los Angeles without impacting our City budget."

A representative from City Council President Eric Garcetti’s office commented on the matter to Canyon News, saying, “Council President Garcetti supports completely eliminating the city's gross receipts tax. He's working with the Business Tax Advisory Committee and his colleagues on the Council to determine the best way to start that—whether by extending the new business tax holiday or providing an across the board tax reduction for all businesses or other alternatives.”

According to a Business Tax Advisory Committee (BTAC) report, the City of Los Angeles has seen jobs in the area contract while the population has greatly expanded, noting that the unemployment rate stands at 14.6 percent, which is 60 percent higher than the national average of 9.1 percent.

In its summary, the BTAC reports that while eliminating the business tax would see a loss of about $425 million for the city in the revenue it generate, but it  could possibly bring in $688 million from other business-related taxes and create close to 131,000 jobs for Los Angeles, creating near full employment for residents.

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