VICA Begins Next Stage of Tax Reform Campaign

VICA Begins Next Stage of Tax Reform Campaign By JACQUELINE FOX Staff Reporter Business groups from the San Fernando Valley and other parts of Los Angeles, along with the city’s Business Tax Advisory Committee (BTAC), will huddle this week with members of the Los Angeles City Council to formally kick off their campaign to abolish the gross-receipts tax and press the council to take the issue seriously. Mayor James Hahn has already said he’d support the idea of replacing the tax, which levies businesses on gross receipts rather than net income, as have some city council members, including his sister, Janice Hahn, who represents the 15th District. City Attorney Rocky Delgadillo has also thrown his support behind the drive to “ax the tax,” according to Fred Gaines, chairman of the Valley Industry Commerce Association (VICA). But there is staunch opposition to the tax repeal movement coming from City Council Members Cindy Miscikowski and Nick Pacheco, which has log-jammed past efforts to negotiate the issue. “The city council just won’t work with us,” said BTAC Co-Chairman Mel Kohn. Hoping to unclog the jam, VICA has formed a coalition to abolish the tax that includes members of the United Chambers of Commerce and the L.A. Central City Association and replace it with a tax that is more business-friendly. L.A.’s gross-receipts tax is the highest in the state and the coalition asserts it is driving businesses to other cities. It also divides businesses into 64 different categories and charges rates of up to $5.91 per $1,000 of gross receipts. The coalition is pushing to whittle the number of categories down to about 10. But considering the gross-receipts tax brings about $300 million to the city’s coffers each year, it is now facing a $250 million budget deficit, and any changes to the tax would involve overturning state law, some say the full council isn’t likely to be too accommodating. “I think it’s a very good idea,” said Jack Kyser, chief economist with the Los Angeles Economic Development Corp. “But is it likely to happen? No. “I’m not looking for much action because the city isn’t likely to approve letting go of that revenue right now, especially when you are talking about potential cuts at the state level.” Gaines admits his coalition faces a tough battle in pushing for changes to the tax, particularly because it would involve taking revenue away from the city something city officials are already confronting as they work out final terms and conditions for a potential Valley secession. “We met recently with the city attorney and he said he was very supportive of trying to find ways to get rid of the tax,” said Gaines. “How confident are we? I think we are going to have to show how the changes can be revenue neutral, that’s the only way the city council is going to take it seriously.” Gaines said the coalition is hoping to put forward a formal plan for alternatives to the tax in the next few months. “We are looking at what we are calling best practices, or what is used in other cities, and we have a lot of that data on our hands already,” said Gaines.