California Apparel News

Representatives from several businesses in downtown Los Angeles had the opportunity to voice their concerns about the current business tax system to city officials at a meeting hosted by the Business Tax Advisory Committee (BTAC) on Feb. 22 at the Los Angeles Public Library’s downtown branch.

BTAC discussed some of its proposed changes to the city’s business tax, which the committee is trying to persuade the city to institute this spring, prior to the April 10, 2001 mayoral election.

Some of the legislative representatives in attendance included city council members Rita Walters, Michael Feuer and Laura Chick and a representative from city councilman Alex Padilla’s office. City attorney and mayoral candidate James Hahn, deputy mayor Rocky Delgadillo, several representatives from the Los Angeles Office of Finance, Tax and Permit department (the division that collects business taxes) and several BTAC members, including Mel Kohn, BTAC chairman and Jack Walker, BTAC vice chairman. Local businesses and organizations represented included the Los Angeles County Economic Development Corporation (LAEDC), Downtown Property Owners Association’s Fashion District Business Improvement District (BID), Mabela L.P. property management company, Cushman Realty, Pacific Bell, Los Angeles Chamber of Commerce, Central City Association, Asia Pacific Islander Small Business Association and the National Association of Women Business Owners.

“It’s a team effort but one member of the team is missing and that’s the community, and that’s why we’re having these meetings,” said Delgadillo.

The BTAC’s proposed changes include simplifying the tax system and modernizing the appeals process.

“On the administrative side, we are going to have a modern system—that’s funded,” said Walker, who noted that the process will take two or three years to complete and will include offering Web-based tax filing.

The committee also is seeking to secure additional funding to the city Office of Finance, Tax and Permit department and to bring more businesses into compliancy.

“We want to help the city go after non-compliant tax dodgers,” said BTAC’s Walker. “We have something like 35 percent not paying their taxes.”

Walker said the committee recommends instituting an amnesty program in the fall to bring more businesses into compliancy.

“We don’t want to just cut the tax rates,” said Walker. “We want to do it in a way to stimulate growth in the city.”

The committee also suggested changing provisions in the current business tax system that allow companies to be taxed twice. For example, a business might be overtaxed if it qualifies for more than one tax category or if a company operates as a subsidiary of a larger parent operation, Walker said.

The business license taxes and utility user taxes in Los Angeles are among the highest in the county, according to attendee Larry J. Kosmont, publisher of the Kosmont Cost of Doing Business Survey.

“The fact is Los Angeles is a very expensive city, much more expensive than the other cities it has to compete with,” he said.

Kosmont said the current business tax system could discourage companies from making a long-term investment in Los Angeles.

BTAC member Walker echoed the sentiment, noting that other cities in Southern California could lure some businesses away from Los Angeles, making business tax reform crucial to retaining business in the city.

“If we don’t deliver something in the short term that is meaningful to the business community it will send a negative signal and drive business out of Los Angeles—because people are watching,” he said.