Butler City Council has approved a revised plan to reduce the city’s 7-mill business privilege tax for new businesses.

The 7-mill tax covers gross receipts of businesses in the service industry, such as restaurants, attorneys and funeral homes. In lieu of the business privilege tax, retail stores and wholesale businesses in the city pay a 1.5-mill mercantile tax.

Butler Downtown’s Economic Restructuring Committee authored the new tax abatement plan, which is designed to make Butler a more attractive place for new businesses to locate.

Council approved it Thursday night.

The tax plan leaves the current two-year tax abatement schedule — 50 percent of business privilege tax exempted the first year and 25 percent exempted the second year — untouched for wholesale retail vendors and rental businesses.

For mercantile retailers, who pay 1.5 mills at full taxation, the new plan implements two years of 100 percent tax abatement, followed by one year at 16.5 percent tax abatement, leaving the business paying the equivalent of 1.25 mills.

For new businesses subject to the 7-mill business privilege service tax, the plan provides two years at 100 percent tax abatement; the third year at 82 percent abatement, leaving the business paying the equivalent of 1.25 mills; the fourth year at 78.5 percent abatement, which is the equivalent of 1.5 mills, and the fifth and final year at 75 percent abatement, which is the equivalent of 1.75 mills.

The abatement percentages were chosen to keep the city competitive with surrounding municipalities.

The council needs to give the tax plan final approval on Dec. 20 before it goes into effect on Jan. 1.