By ROCKY DELGADILLO

A recent Kosmont-Rose Institute Cost of Doing Business survey found that Los Angeles ranks as one of the most expensive cities in the nation to do business. The reason? Taxes on business operations here are five times higher than elsewhere.

The business community will tell you that the primary cause of this disparity is our gross receipts tax or “business tax,” which can take anywhere from $1 to $6 for every $1,000 of a company’s gross receipts.

The tax is particularly onerous because it is applied uniformly, without regard to a business’ profitability. A company that generates significant revenues and still suffers a net loss is faced with the further indignity of a steep tax bill from the city. For a city trying to encourage job creation through business formation and expansion, this is particularly problematic. Companies in the early stages of development or facing a large capital expenditure are precisely those that need to be encouraged, not taxed.

Even when applied to existing businesses not engaged in expansion, the gross receipts tax, applied on top of overhead costs of rent, labor, utilities, etc., cuts into margins and discourages thoughts of additional job creation or corporate expansion.

A few targeted reforms were recently implemented, and these start to move us in the right direction. On Jan. 1, all L.A.-based businesses received a 3.1 percent rate reduction, and companies with gross receipts of less than $50,000 were exempted from paying any tax. Small- and medium-sized entertainment companies and creative artists also recently received some business tax exemptions.

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We must continue this trend by removing the single largest obstacle to job growth in our city if we are to have any hope of keeping our businesses from leaving, any hope of bringing back businesses that have left, and any hope of attracting new business.

And the idea is not as radical as it might at first appear.

In his 2005 mayoral campaign, former Assembly Speaker Bob Hertzberg argued for the elimination of the gross receipts tax, and in a 2003 speech, City Council President Eric Garcetti said he was ” committed to finding an alternative to the unfair and arcane gross receipts tax employed by the city.”

The business tax provides approximately $400 million in annual revenue to the city 10 percent of the general fund and 6 percent of the city’s overall budget.

But economic studies and surveys of local businesses have shown us that the loss in revenue from phasing out the business tax would be offset by increased gains from sales taxes, property taxes, utility taxes, and license, permit and fee revenues paid by the companies remaining in, and coming to our city.

Practically every company that leaves Los Angeles does so because of the city’s tax burden. Two-thirds of those companies move to nearby places such as Burbank, Glendale and Culver City. Eliminating the business tax would keep these companies and their jobs right here in Los Angeles. The more capital businesses have for retention, worker training and expansion the better off this city will be.

This is a long-term investment in the economic stability of our city. In the past, elected officials taking on tax reform have always focused on the immediate effect to the city’s budget. Any short-term loss to city revenue was considered a poison pill. I believe that this revenue neutrality is a short-sighted policy when long-term fiscal, employment and economic gains are readily attainable.

Systematically phasing out the gross receipts tax will send a very clear message to job creating businesses that Los Angeles is the place to thrive.

Los Angeles City Attorney Rocky Delgadillo previously served as deputy mayor for economic development in the Riordan administration.