Speaking to the United Chamber of Commerce Annual Mayor’s Luncheon in Woodland Hills, Mayor Antonio Villaraigosa said that the three-year tax holiday on new businesses that he implemented in 2010 should never expire. The policy is currently set to expire in 2012.

“The business tax holiday is a proven tool for bringing businesses to Los Angeles and generating jobs,” said Mayor Villaraigosa. “So today, for the first time, I am calling on the City Council to make the three year tax holiday for new businesses permanent. There should be no expiration date on this common-sense, job-creating policy.”

In 2010, Mayor Villaraigosa led the fight for the new Business Tax Holiday. That policy grants a three-year exemption from the City’s business tax for businesses operate in Los Angeles.

This holiday provides them with the opportunity to establish a solid foundation for economic success.

The business tax holiday has proven to be a powerful incentive. Job creating companies like Google, BYD, Beverly Hills BMW, Costco, Farmer’s Insurance, Lucky Brand, Target, Blackline Software, Tom’s Shoes, Gensler, Coda, and Telscape Communications have relocated to Los Angeles in part because of the holiday.

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.

Mayor Villaraigosa wants the City to go one step further. He wants to make the three-year tax holiday for new businesses permanent and will work with the City Council to make that happen.

LA’s business tax is a gross receipt tax which means it is a top-line tax that does not take into account profits. If you have two companies both with revenue of $1 million but one has $900,000 in profits and the other $100,000 in profits they would both pay the same amount. And the top tier is the highest in the region and is seen as a disincentive for doing business in Los Angeles.

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. 

“I support a fiscally responsible approach to the elimination of the business tax,” said the Mayor. “I am committed to creating a healthy environment for job creation in Los Angeles while maintaining the City services businesses rely on and further reducing our City’s structural deficit.

“A recent study shows the immediate, complete elimination of the tax will cost the City hundreds of millions of dollars during the worst economy of our generation. I encourage the Council to take an aggressive and thoughtful approach to increase economic development and economic stability for the City. The Business Tax Holiday has done just that by incentivizing job creators to move to Los Angeles without impacting our City budget,” Mayor Villaraigosa added.