Tax break proposals move closer to hearing 

Lawmakers on Tuesday said they will likely hear Mayor Gavin Newsom’s controversial package of proposed tax breaks for businesses despite recent pledges to block the measures.

Supervisor John Avalos, head of the Budget and Finance Committee, has called Newsom’s proposal for three payroll tax exemptions dead before arrival, saying it’s doubtful the incentives would have a positive impact on San Francisco businesses that are struggling due to the recession.

The spat is one of ideological opposition: Avalos, a progressive liberal, and Newsom, a moderate liberal, have opposing views on how government can help reduce The City’s unemployment rate, which is hovering at around 10 percent.

Newsom has accused Avalos of trying to upend the democratic process by refusing to hold a hearing at City Hall to debate his tax proposals.

Avalos said Tuesday that he planned to schedule a hearing on the three proposals once analysis of their economic impacts is complete. The analysis is expected to wrap up next week, he said, and the proposals likely will be calendared at the Feb. 10 committee meeting.

Avalos said he still opposes Newsom’s ideas.

The proposals include a payroll tax exemption for new hires, a tax credit for small businesses providing health care to their employees and an extension of the biotech payroll tax exemption.

The latter proposal, which would allow biotech businesses to benefit from the payroll tax exemption for 7½ years, has gained political traction.

Board of Supervisors President David Chiu, who has shared Avalos’ skepticism about Newsom’s tax proposals, said Tuesday that recent analysis by the city controller has convinced him that the biotech tax exemption has helped grow a base for the life sciences industry in The City.

The exemption has only been used by eight businesses, but it’s a low-cost solution that has helped grow the biotech industry from two to 56 businesses during the past five years, the analysis showed.

The number of industry jobs during that period grew from 500 to 2,750, the report said. Each year, those employees sink around $7.6 million in payroll, sales and tax revenue into city coffers, according to the report.

“I think the data is incontrovertible,” Chiu said.

maldax@sfexaminer.com

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