Less tax revenue seems like a bad idea, especially in times of budget crises, cuts and lay-offs. And still Mayor Antonio Villaraigosa signed a new ordinance today that will reduce the tax money the city collects from Internet businesses.

The measure was unanimously supported by the City Council earlier this month. It was deemed necessary because business owners complained to the mayor’s Office of Economic Development and Business Policy about their high tax load.

One year ago the city moved companies that do their business online from the lowest tax bracket in to the highest. The newly signed reversal will lower those businesses’ taxes retroactively to Jan. 1.

“This ordinance will be instrumental in attracting, retaining and growing the Internet industry in the city of Los Angeles and the good-paying jobs that this industry supports,” said Mayor Antonio Villaraigosa.

City Council President Eric Garcetti said that reclassifying Internet businesses would cost the city $3.4 million this fiscal year in taxes not collected. In the long run, however, the city would lose more money if it lost the Internet businesses that had threatened to leave Los Angeles and move to surrounding communities.

In her testimony before the City Council, Antoinette Christovale, Office of Finance director, said the 1400 businesses that “generate revenues by providing access to Internet-based electronic applications or Internet-based search engines” and are affected by the new ordinance are responsible for $6.8 million of the city’s tax revenue.

“If they were up and leave, it’s not just the $3.4 million that you’re looking at, it’s the entire $6.8 million,” she said.

Gary Toebben, LA area Chamber of Commerce president, praised the ordinance as “the first step in a strategic plan to revise our tax codes so that we can target high-paying jobs for the citizens of our community and grow the tax base for Los Angeles.”