"Today, for the first time, I am calling on City Council to make the three-year tax holiday for new businesses permanent. There should be no expiration date on this common-sense, job-creating policy," the mayor said.
The tax holiday was introduced in 2010 and currently is set to expire in 2012. Councilmen Mitch Englander, Tom LaBonge and Eric Garcetti, the council president, have recently called for extending it until 2015.
That means hundreds of millions in taxes will not be coming in for the city.
"We're talking about $440 million, so we have to in a responsible way," the mayor said.
The tax holiday was instrumental in getting Google to move its offices from Santa Monica to Los Angeles.
Construction is underway in downtown Los Angeles on the new headquarters for Gensler, an international architectural firm. Gensler has 250 employees and wants to expand by more than 40 percent in five years. The business tax holiday lured the company to Los Angeles.
Beverly Hill BMW, BlackLine Software and TOMS Shoes have also been lured by the policy, which makes a business exempt from paying the local business tax during its first three years in Los Angeles.
The mayor has so far only asked the City Council to make the current business tax holiday permanent, but eventually wants to eliminate the business tax altogether.
The mayor acknowledged that the money lost is not going to be easy to replace. But as Google's move indicates, it's a major incentive to move jobs to Los Angeles.