EDITORIAL : YEAH, IT'S BROKEN; CITY STUDY CONFIRMS THE OBVIOUS, THAT THE TAX SYSTEM IS TOUGH ON BUSINESSES.

IMPOSSIBLE as it sounds, the City Administrator's Office spent two years studying ways to simplify Los Angeles' Byzantine business tax system and then ducked the main question: how to fix it.

The study was sought by Mayor Richard Riordan in response to complaints that the complexity and inequity in the tax system made Los Angeles uncompetitive, prompting many businesses to move to more accommodating cities such as Burbank, Glendale, Pasadena and Santa Monica.

The report, developed by a team of researchers from UT Industries Inc., Arthur Andersen and Landmark Partners, suggested three ways to change the tax structure and make the city more competitive.

But then the study said up to 25 other alternatives could be explored as ways to alter city taxation.

And in issuing the report, City Administrative Officer Keith Comrie made it abundantly clear he was not making any recommendations to go along with the report sent to Riordan and City Council members.

Riordan's office said he is making the revision of the city's outdated, antiquated and bureaucratic tax system ``one of his top priorities.''

The mayor said something very similar during his first administration, but we guess this time, he really means it. No, really.

Meanwhile, the city's business tax structure just keeps growing and growing. When the city began reviewing its archaic tax structure, there were 52 separate categories for businesses. Now there are 62.

Complicating the city's tax system is that some businesses are exempted - those selling gas and electricity, railroad companies, and telephone companies - while others have a cap on taxes.

Further adding to the city's woes, as many as 40 percent of all businesses fail to pay their taxes, studies have found. The city's complicated and confusing tax form, which comes without instructions, doesn't help.

Is any of this a problem?

Yes, according to the city report. ``(Business taxes) become a critical factor in a situation where a firm can find everything it needs in Los Angeles or numerous other adjacent cities,'' the report said. ``In these `tie-breaker' situations, Los Angeles' tax structure is a major deterrent due to its complexity and rate structure.''

So the report confirmed what we're certain no one else in Los Angeles had figured out. The city's tax system is too complicated, too unfair and too taxing.

But don't look for answers before the next millennium. That's how long it will take to complete another study.

Meanwhile, the city will continue losing business to nearby communities that have found ways to cut through the red tape and political inertia.