LADWP Proposes a "tax holiday" for new LA businesses

City officials today proposed a "business tax holiday'' for new firms that open in Los Angeles.

Under the proposal, which must be approved by the City Council, new businesses would be exempt from paying gross receipts taxes to the city for three years if they open or locate in Los Angeles.

A new business is defined as one that has not previously paid business tax receipts and is not currently operating in the city.

"We continue to work to develop and implement policies to help retain the employers who are located in Los Angeles to attract new businesses providing good-paying jobs,'' said First Deputy Mayor Austin Beutner, who is also the city's chief executive for economic and business policy and interim general manager of the Department of Water and Power.

USC professor Charles Swenson researched the benefits of a business tax holiday.

"The new policy will lead to the creation of up to 55,000 jobs and generate additional revenue for the city of Los Angeles,'' he said.

Councilman Richard Alarcon, who chairs the City Council's Jobs and Business Development Committee, was supportive of the proposal.

"Each company coming to L.A. represents a net revenue increase of $8,188 to the city,'' he said.

To further encourage new businesses to open in Los Angeles, the DWP unveiled a discount program for new customers and announced the creation of a "SWAT'' team to expedite power and water service connections.

Under the program, new business customers will be given discounts of up to 25 percent.

"As the nation's largest municipal utility, our customer base is big enough to accommodate new business customers with this type of discount,'' Beutner said. "Ultimately, this program may create savings in the future since there will be more customers to share in those fixed costs.''

The announcements were made as Baxter International Inc. agreed to remain in Los Angeles, after its location became part of an expanded state enterprise zone where businesses enjoy tax credits and other incentives.

Mayor Antonio Villaraigosa said the decision preserved 600 jobs. Councilman Tom LaBonge estimated the company pays more than $23 million in annual taxes to the state and city.

Gov. Arnold Schwarzenegger said courting businesses is key to a regional and statewide recovery.
"For our economy to recover, we need the private sector to add jobs, and the proposed business tax holiday and recent expansion of the East Los Angeles Enterprise Zone are two surefire ways to do exactly that,'' he said.

Wire services contributed to this story.