87.4 F
San Fernando
Saturday, Sep 23, 2023

Extent of Tax Reform May Depend on Budget Decisions

Extent of Tax Reform May Depend on Budget Decisions By SLAV KANDYBA Staff Reporter Although two business tax reform proposals are now in the hands of a committee of the L.A. City Council, the movement to change the system could stall due to the city’s budget problems. While Valley councilmembers Wendy Greuel, Jack Weiss and Tony Cardenas will discuss the proposals among themselves as members of the council ad hoc committee, the full council will have to cobble together a budget before June that is already adversely affected by the state’s difficult financial situation. “We’re going to go through the budget process before entertaining these motions,” said Mike Hernandez, the former city councilmember and now Councilmember Bernard Parks’ deputy, speaking on behalf of Parks at the Business Tax Advisory Committee’s meeting at City Hall on April 12. Parks is chairman of the council’s budget and finance committee. At the meeting, 5-year-old BTAC, a citizen group made up of business leaders from different parts of L.A., unanimously approved a proposal that would cut the city’s business tax by 15 percent over five years, with an additional 15 percent cut on top of that if the city’s budget situation permits. A second proposal, the so-called Greuel-Garcetti Proposal, which was co-sponsored by 13th District Councilmember Eric Garcetti and Greuel and was presented a day after BTAC’s recommendation, seeks to cut taxes faster by 25 percent over five years, with an additional 25 percent if the city is financially stable. Greuel said in an interview with the Business Journal that the city of L.A. must make itself more competitive on the global stage and even against local cities such as Burbank and Calabasas, where no business tax is collected. In addition to cutting the taxes, both the BTAC and Greuel-Garcetti plans call to do away with the current classification system that uses more than 50 categories to determine tax rates. Both favor the same five-category system used by the federal and state governments. Neither proposal will be due for consideration by the full Council until the city budget is discussed, Hernandez said. And then, both proposals will face scrutiny from councilmembers, some of whom may be reluctant to provide businesses with tax relief at a time when the city is getting less money from the state. BTAC Vice President Jack Walker, however, said his committee’s proposal was the more “palatable” of the two because it was less risky, took less revenue away from the city, and would likely face less opposition. “I think the politics would indicate that the councilmembers from the less developed areas would be more skeptical and less risk-taking than those from the Valley,” Walker said. But before there will be any action, the two proposals would have to be discussed and combined. “It will take a while to reconcile these two approaches,” Walker said. With its proposal work behind it, BTAC will meet April 29 to discuss how to improve compliance, or make sure that businesses that evade paying taxes do so. Through compliance, BTAC members including Walker said they believe the city’s loss of $54 million due to business tax cuts could be made up.

Featured Articles

Related Articles