COUNCIL OKS ONE-CATEGORY TAX SYSTEM 10,000 BUSINESSES AFFECTED.

Byline: Rick Orlov Staff Writer

Taking a long-promised step toward simplifying the city's business tax system, the Los Angeles City Council approved a plan Tuesday to create a single-category system.

Under the proposal, which now goes to Mayor James Hahn for his approval, some 10,000 businesses citywide would be able to file in only one category for tax purposes, resulting in an overall savings of $2.9 million. The lost revenue would be covered by its reserve fund.

``The city of Los Angeles should have a business tax system that is simple, equitable and works to attract businesses and jobs to the city,'' said Councilwoman Wendy Greuel, who chairs the council's ad hoc committee on taxes. ``A business friendly city is a better city.''

Councilman Eric Garcetti said the plan would help Los Angeles compete against some of its lower-taxing neighbors such as Burbank and Glendale.

``We can use this tax reform to locate businesses here,'' Garcetti said. ``This helps us to bring in the jobs we want here. We can do it with economic incentives or we can do it with our tax policy.''

Greuel said she is planning to put forward other measures with a goal toward eliminating the gross receipts tax. Among her proposals are efforts to raise the exemption threshold for small businesses, restructure the other tax categories and look at ways to boost growth industries.

Rick Orlov, [phone]

rick.orlov(at)dailynews.com