Des Moines’ business leaders are sounding off on a proposal to scale back Iowa’s tax credits, IowaPolitics.com reported.

Lawmakers, who contend they are responding to questions raised about the credits following allegations of abuse in the state film tax-credit program, are considering a way to rein in the state’s $525 million tax-credit program.

The plan calls for the suspension of the film tax-credit program until July 2012 while criminal and civil investigations are completed, an overall cut of 10 percent from many other tax-credit programs and more oversight.

It includes lowering the cap on economic development tax credits to $120 million from $185 million and cutting the Iowa Fund of Funds contingent tax credits to $60 million from $100 million.

State Sen. Joe Bolkcom (D-Iowa City) called the proposed changes “a modest effort” to curb one of the fastest-growing areas of state spending.

“This $500 million is not just off the table as some sacred spending,” said Bolkcom, whose Senate Ways and Means Committee gave the legislation a 10-6 initial vote of approval on Monday.

But some are less sure of the plan.

David Roederer, executive director of the Iowa Chamber Alliance, urged a Senate panel to reconsider the changes, which would reduce tax credits by $12 million in fiscal 2011 and $115 million over three years.

Attorney Bill Brown, whose firm is involved in the Fund of Funds venture capital investment pool, said “a knee-jerk reaction to the film tax-credit scandal” could signal to Iowa’s entrepreneurs that the state is “not really open for business here.”

Majority Democrats in the Iowa Legislature say the proposed changes are necessary to reduce the state’s liability and increase transparency and accountability.

The Research Activities Credit would be changed to help small businesses and start-up firms create more jobs by giving them a 10 percent tax credit. However, the credit for firms with gross revenues of more than $20 million a year would drop to 3 percent from 6.5 percent.

Victor Elias of the Child and Family Policy Center called Iowa’s research activities tax credits “the most generous” in the nation and said there is no evidence the investments result in jobs or research.