A labor-backed bill moving through the Legislature seeks to impose a 5% payroll tax on temp agencies in California starting in 2004.

Supporters say temps are much less likely than permanent employees to earn a living wage, receive health insurance or get retirement pay --and therefore they're more likely to rely on local governments for healthcare, housing and other services. The tax would help offset that cost.

Wrong, business leaders say: The tax would chill the staffing industry and hurt employers who use temporary employees, as well as low-skilled or entry-level workers.

The move will squash a struggling industry, opponents counter. "This bill would kill my business overnight," said David Landry, CEO of The CalStaff Cos., the fifth-largest staffing agency in Sacramento

"It's a brand-new payroll tax that singles out one industry," said Julianne Broyles, a director for the California Chamber of Commerce. "More than that, we are virtually certain this tax will be passed straight through to our members --particularly small-business members -- because they frequently outsource and look to temporary-service people to cover busy times of the year."

As reported by the Sacramento Business Journal: The temporary-staffing industry in California has a gross annual payroll of $10 billion, organized labor estimates, so a 5 percent tax would generate $500 million a year.