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Business Tax Panel Sets Agenda for Pushing Reform

Business Tax Panel Sets Agenda for Pushing Reform By SLAV KANDYBA Staff Reporter The Business Tax Advisory Committee, the group of business leaders that was assembled to develop a plan for business tax reform in the City of Los Angeles, was expected to stay together past its disbandment date as reform efforts head toward possible completion in the fall. With Mayor James Hahn and several council members speaking recently in favor of separate business tax reform measures, it will be up to the committee’s job to advocate business interests. BTAC was created five years ago by a motion of the City Council, and was supposed to be disbanded at the end of June. But at presstime its “sunset,” as committee members call it, was expected to be extended soon by a vote of the council. The committee’s role will be redefined, however. Its existence will be largely to act as a watchdog, and “shepherd” the business tax reform process to conclusion, said Mel Kohn, a partner in the Encino-based Kirsch, Kohn and Bridge CPA firm and president of BTAC. Having submitted several recommendations to the council’s Ad Hoc Committee on Business Tax Reform, which consists of Councilmembers Tony Cardenas, Wendy Greuel and Greig Smith, the committee has done what the council asked it to do five years ago. But that wasn’t enough, committee members felt. “Just because you have a five-year term doesn’t mean you leave the job at just a recommendation,” said Mel Kohn, “If we don’t follow through, we’re concerned (whether) anyone is going to watch it.” Kohn added that because there is $11 million set aside in a trust fund, business tax reform could actually begin in 2005, based upon what city officials do. “That’s why we believe BTAC should (be involved) on the continuing basis,” Kohn said. Jack Walker, BTAC vice president, echoed Kohn: “Our job will essentially be one of lobbying (and) to represent the business side in pushing this thing through,” he said. Walker added that BTAC would spend most of its summer meetings doing “number crunching” and “writing ordinance language,” to submit to the ad hoc committee. According to the agenda for BTAC’s next meeting, scheduled for June 24 at L.A. City Hall from 2 to 5 p.m., committee members will hear a summary of their efforts over the past five years and an update from the city council about the extension. A representative of the ad hoc committee on business tax reform is scheduled to update BTAC about its plans on what recommendations to make to the council’s budget committee. After that committee, tax reform would be voted on by the entire City Council, and then submitted to the mayor for approval. Recommendations to council BTAC will also vote on several important motions, Kohn said. One of them would recommend that various BTAC proposals to the ad hoc committee, including the phase-out of business tax and elimination of taxes on creative talent, are treated “as a package rather than piecemeal” when they are presented to the City Council. “We want them to look at the totality of the tax reform package,” Kohn said. “The package itself is important.” Los Angeles Mayor James Hahn, who drew the ire of BTAC for proposing to use funds from the trust fund to balance his budget, has expressed his support for business tax reform recently. At a press conference at From the Ground Up, a North Hollywood shop, Hahn proposed that businesses with less than $100,000 in annual gross receipts not be charged taxes. Fifty six percent of businesses in L.A. would fall under this category, and the city would take in $5 million less in taxes as result, Hahn said. “We think this is something we can absorb,” Hahn said. “It’ll cost $5 million. We think it’s a reasonable amount of money, (which) will help businesses grow and get into taxable level. “Our goal is to have businesses grow,” he said. “We want to add jobs here.” Addressing BTAC’s Kohn, who stood by his side during the press conference, Hahn said “We do want to indicate we’re extending your sentence We ain’t done yet!” Kohn appreciated Hahn’s announcement, and said “this is a clear message from the mayor that L.A. is business friendly.” He underscored that it would be “a very significant step for the entertainment industry,” as it would “help to bring small production shops (to L.A.) from Glendale and Burbank.” The Valley Industry and Commerce Association took less than a week after Hahn’s announcement to put even more pressure on city officials to implement tax reform. VICA backs deadline On June 15, VICA issued a strongly worded statement calling for implementation of reform by Oct. 31. Stating that “after seven years of discussion, studies, community forms and press conferences, there’s nothing more to research,” the organization called for a business tax package to be passed. The date was chosen to ensure necessary changes were made to the tax systems by Jan. 1, 2005. VICA’s top executive also sent a message that VICA had support behind its call for a deadline. “To better communicate our desire to bring this long-standing discussion to a vote and successful conclusion by the Oct. 31 deadline, VICA is assembling a coalition of business organizations, labor unions and other interested individuals and organizations to champion this effort,” said Martin M. Cooper, VICA chairman. BTAC’s Kohn was pleased at VICA’s statement, saying it added to the momentum for business tax reform implementation. “I personally feel there is a climate to get something done now,” Kohn said.

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