Businesses in Los Angeles can expect to keep more of their money in 2006 thanks to a tax cut that kicks in Jan. 1. Several provisions of a tax reform package passed by city leaders in 2004 take effect this New Year’s, including an across-the-board 3.1 percent reduction in the business tax. Small firms with less than $50,000 in annual gross receipts will be exempt from local business taxes, and reforms aimed specifically at the entertainment industry will also take effect. “We want to keep business here in Los Angeles,” said Councilwoman Wendy Greuel, a San Fernando Valley representative and a leader of the tax reform effort. “We worked very hard on business tax reform that a lot of people said couldn’t be done.” AD Quality Auto 360p 720p 1080p Top articles1/5READ MORERose Parade grand marshal Rita Moreno talks New Year’s Day outfit and ‘West Side Story’ remake Companies have long complained about local taxes, saying Los Angeles is losing enterprises to neighboring towns with lower rates. Years of efforts to simplify and cut fees culminated in a tax reform package passed by the City Council and signed by then-Mayor James Hahn in late 2004. The reforms could eventually lead to a 15 percent tax cut, although they will be phased in over time and the annual decreases depend on the city’s revenue stream. With the reduction effective Sunday, retail-sales businesses will owe a minimum of $107.42, plus $1.43, for every $1,000 over $75,000 in gross receipts, down from $110.86 and $1.48. For professions, the rate will be a minimum of $103.13 plus $5.73 for every $1,000 over $18,000, down from $106.43 and $5.91. It may seem small but it is an important first step, said Bruce Ackerman, president of the Economic Alliance of the San Fernando Valley. “I think the businesses are going to greet it with a positive response,” he said. “Three percent is not a great deal but it is something and it is a beginning.” Such small reductions add up and create significant savings, said Mel Kohn of the Valley Industry and Commerce Association. The leader of an advisory committee that was involved in the reform process, Kohn said he is particularly happy about the exemption for small businesses. “These new laws coming into effect are really making L.A. more attractive to keep businesses here,” he said. The small business exemption is also phased in over time. Businesses with $50,000 or less in gross receipts will be exempt this year, and those with $100,000 or less will be exempt starting Jan. 1, 2007. Other provisions kicking in Sunday include reductions and exemptions for a wide variety of entertainment industry businesses, as well as the streamlining of fees for small to mid-size production companies. “We have to do everything we can to keep those production jobs here in Los Angeles,” Greuel said. “There is a domino effect – when we have entertainment jobs we have florists and caterers and security, you name it.” Officials will continue to work on tax reform in 2006, Greuel said, with an emphasis on streamlining and simplifying the code. Dan Laidman, (213) 978-0390 [email protected] 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!