Free Enterprise Oases

Nowhere is the need for industrialization more evident than in the nation's inner cities. Most of them, despite countless Government programs, have deteriorated from once thriving business and residential centers into devastated no man's lands. Now comes a novel approach to the problem: enterprise zones, or districts in the heart of blighted areas, where small firms would be given tax breaks and perhaps exempted from entangling Government regulations.

The idea is enshrined in the Urban Jobs and Enterprise Zone Act, proposed in June by two New York State Congressmen, Republican Jack Kemp of Buffalo and Democrat Robert Garcia of The Bronx. Under their bill, businesses putting down roots in, say, a square-mile section of Chicago's South Side, would receive a variety of reductions in capital gains and corporate income taxes. Local governments would also be obliged to contribute to the endeavor by reducing property taxes inside the zone by 5% annually for four years. In return, the firms would have to hire at least 50% of their company's work force from the local population. Part of the original plan was that the industrial zone would be dispensed from many heavy Government regulations, but Kemp felt that this was politically impossible. He still hopes to include it in future projects.

The enterprise-zone concept originated in Britain through an unusual alliance of the left and the right. Peter Hall, former chairman of the socialist Fabian Society, wrote a pamphlet that inspired Sir Geoffrey Howe, the Conservative Chancellor of the Exchequer, to urge that it be tried. Despite strong opposition from the Labor Party, the Conservative government in April provided about $70 million for six enterprise districts in England, Scotland, Wales and Northern Ireland.

Firms locating in the areas probably will pay no local taxes, receive immediate and full tax write-offs for capital investment and avoid some paper work, like that required for government training grants.

Previous federal projects to rebuild urban centers have usually been costly failures. Sponsors of this plan argue that it might just prove the simplest and best way to revitalize inner cities.

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