Let’s Permanently Extend LA’s 3-Year Tax Holiday for New Businesses

Antonio Villaraigosa
Mayor of the City of Los Angeles

With unemployment in California hovering at 12 percent and with Washington in a stalemate on job-creation measures, the City of Los Angeles has been stepping up its efforts to put people back to work.

We are pursuing a five-part strategy to create jobs. We are: (1) reforming LA’s business tax; (2) reducing red tape; (3) partnering for economic growth; (4) modernizing LAX and the Port of LA; and (5) building a 21st century transportation network.

My five-part plan starts with reforming LA’s business tax because it is a huge barrier to attracting business to the City. Several cities in the region including Glendale, Calabasas, and Santa Clarita have no gross receipt business tax, making LA a tough sell to businesses looking to start up or relocate.

In 2010, I led the successful fight for the new Business Tax Holiday. Under the Business Tax Holiday, which was authored by Councilmember Richard Alarcon and former Councilmember Greig Smith, businesses are exempted from the City’s business tax for the first three years that the business operates in Los Angeles.

This holiday provides new businesses in LA with the opportunity to establish a solid foundation for economic success.

The business tax holiday has proven to be a powerful tool for attracting companies to our city. New companies in Los Angeles like Beverly Hills BMW, the Blackline software company, the Gensler architectural firm, and Tom’s Shoes have told our business team that they were attracted to LA, in part, because of our new business tax holiday.

The latest company which was attracted to Los Angeles by our new business tax holiday is Google. The grand opening of their 100,000 square-foot facility in the Venice section of Los Angeles takes place on Nov. 3.

When we attract new businesses to Los Angeles, the City is a long-term winner because of the jobs created and the revenue that is generated through sales tax, property tax, and utility users’ tax.

Councilmember Mitch Englander, Council President Eric Garcetti, and Councilmember Tom LaBonge have recently called for extending the three-year tax holiday for new businesses until 2015.

I want us to go a step further: the three-year tax holiday for new businesses should never expire.

There should be no expiration date on this common-sense, job-creating policy.

 

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