BIGGER TAX CUTS SOUGHT MORE NEEDED TO FIX ANTI-BUSINESS IMAGE.

Byline: Rick Orlov Staff Writer

A new proposal to streamline the city's business tax ran into opposition Friday, with officials and economists saying the tax would have to be reduced more - or even eliminated - to help improve Los Angeles' anti- business reputation.

During a speech to the Los Angeles Area Chamber of Commerce, City Attorney Rocky Delgadillo said the tax reform package proposed this week by a consultant paid $420,000 by the city doesn't go far enough, and the business tax should be phased out entirely.

``If Los Angeles is to succeed as a city, we need to be a partner with business,'' said Delgadillo, who headed the city's business team under former Mayor Richard Riordan. ``Ending the business tax is an investment to bring business to the city. The more business we have, the more money that will come to the city.''

The proposal developed by MBIA MuniServices for the city's Business Tax Advisory Committee recommended replacing the current tax system, which has 65 categories, with one based on a combination of revenue and square footage.

``This is just a starting point for us,'' said Mel Kohn, chairman of the advisory committee. ``What is encouraging is that we're seeing a lot of debate on the issue. People recognize something has to be done and this is a start of that dialogue.''

Councilwoman Wendy Greuel, who has been pushing tax reform and chairs the council committee overseeing the process, said she wants to see business taxes reduced.

``What this report did, however, was recommend getting rid of the most onerous aspects of the business tax,'' Greuel said. ``That's a good starting point for looking at the entire system.''

Mayor James Hahn also has made business tax reform a part of his policy and is monitoring what is developed by BTAC and the council.

Larry Kosmont, of Kosmont and Associates, said the MBIA study was hampered because it was designed to be revenue-neutral to the city.

``It moved in the right direction by eliminating a lot of categories, but there is still much to be done,'' said Kosmont, who conducts an annual survey on the cost of doing business in major cities. ``At least the consultants recommended moving away from the existing system. But I don't know if the city will go as far as it needs to.''

Part of the problem is the $300 million budget deficit facing the city, said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp.

``We have to deal with those issues,'' Kyser said. ``How quickly will the city move, given the problems it is facing now? No one knows. We have to see how that works out before anything is changed.

Kohn, however, argues this is the perfect time to look at the business tax structure.

``We don't have a strict timeline to change the system,'' Kohn said. ``But now is the time we can debate what should be done.''

Rick Orlov, [phone]

rick.orlov(at)dailynews.com