5% REDUCTION PER YEAR OR 3%? DUELING BIZ TAX REFORMS PROPOSED TO COUNCIL.

Byline: James Nash Staff Writer

After a decade of debate with little action, two proposals emerged Monday that would reduce the tax burden on businesses in Los Angeles by 15 to 25 percent over five years.

The proposals were hailed as necessary to change the city's anti-business image and help stimulate the economy while stemming the flow of small and large businesses and good-paying jobs to neighboring cities and other states. But both proposals face an uncertain future because they would reduce city revenues during a time of fiscal crisis.

On Monday, Los Angeles City Council members Wendy Greuel and Eric Garcetti outlined a proposal to reduce business taxes by 25 percent over five years, with the possibility of another 25 percent cut if it does not depress city revenues.

At the same time, a panel of business leaders endorsed a plan to reduce business taxes by 15 percent over five years, with the possibility of another 15 percent cut under the same scenario.

Greuel and Garcetti called their proposal a bold move to jump-start the local economy, while members of the Business Tax Advisory Committee said theirs was the more responsible proposal.

Some business leaders said they favor Greuel and Garcetti's more aggressive approach, noting that other cities have much lower business taxes or none at all.

``Of course we have to go with 5 percent (annually) over 3 percent, of course,'' Bonny Herman, the president of the Valley Industry and Commerce Association, told the advisory committee Monday. ``Come on, guys, do as much as you possibly can.''

At its meeting Monday, the Business Tax Advisory Committee - a 5-year- old panel of business leaders from around Los Angeles - declined to support a more complex proposal that would shift the tax burden while phasing out taxes based on square footage over five years.

Instead, the panel unanimously backed its own proposal for a 15 percent reduction over five years with the prospect of another 15 percent cut.

``We've addressed the issue of simplicity and equity for businesses,'' said advisory committee co-chairman Mel Kohn. ``If you go back and look at the history of (the advisory committee), you'd see that we're a very responsible committee. We don't believe you can spend money you don't have. So our philosophy is that we're very comfortable with the range of 15 percent plus 15 percent.''

In unveiling their proposal Monday, Greuel and Garcetti called it a long- overdue reform needed to keep businesses and jobs from leaving Los Angeles.

``Business tax reform is part of job creation,'' Greuel said.

Now some 30 percent of businesses do not report their taxes to the city, and 20 percent underreport.

``A simple and equitable tax system is going to help with compliance,'' Greuel said.

The council members' proposal, which is scheduled to be introduced to the full council today, would single out eight categories of business for special tax relief. Garcetti said those industries, which include the health and biomedical field, entertainment and furniture making, represent a potential for 5,000 new jobs in Los Angeles.

Staff reporter Kerry Cavanaugh contributed to this report.

James Nash, [phone]

james.nash(at)dailynews.com

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