By Tom Waring
Times Staff Writer
The Tax Reform Commission has been asked to find ways to lower the tax burden in the city while assuring that there’s enough revenue left to provide services.
“Whatever we recommend must be done in a fiscally and socially responsible manner,” said Ed Schwartz, a former city councilman and chairman of the commission.
Schwartz and commission members Al Taubenberger and Tom Forkin came to CORA Services last week for a public hearing on the tax structure.
The TRC was created last November, when 80 percent of voters approved it in a referendum.
The 15-member commission has been meeting since January and plans to issue a preliminary report in mid- to late September in order to give Mayor John Street and Republican challenger Sam Katz the opportunity to comment on its findings.
The final report is due by Nov. 15.
“We’re doing this in as apolitical a fashion as possible,” said Forkin, who lives in Mayfair.
Forkin, an attorney and president of the American Street Erie Avenue Business Association, believes that the commission represents a once-in-a-generation opportunity to significantly alter the tax structure.
Schwartz offered a sneak peek into the TRC’s report when he said the commission was considering a “very ambitious” plan to cut business taxes.
Forkin said the gross receipts tax, in particular, was a disincentive to business. That tax is imposed on businesses whether they make a profit or not.
Taubenberger, vice chairman of the commission and president of the Greater Northeast Philadelphia Chamber of Commerce, has seen businesses flee the city because of high taxes.
“They start to get successful, then they move out,” he said.
Momentum to create the commission began in January 2002, when Street announced an end to wage tax decreases. The Greater Philadelphia Chamber of Commerce led a revolt, and the mayor changed his mind.
The Pennsylvania Economy League issued a report that called the wage tax an impediment to economic development. The Center City District released a study showing that Philadelphia created little office development in the last decade.
City Councilman Michael Nutter introduced a bill to place the commission measure on the ballot. Council passed the bill, then voters gave their approval.
Meanwhile, many Philadelphians were enraged in the summer of 2002 when they saw their property taxes rise dramatically.
Now that the TRC is in place, it is studying wage, business, real estate, sales and land taxes. The commission cannot comment on spending issues.
“We’re not here to be the city controller,” Schwartz said.
At last week’s hearing, Lawndale’s Phil Cunningham urged the commission to recommend that the city go after uncollected real estate taxes. He suggested the city’s 10-percent property tax abatement on new construction is too generous.
Lawncrest’s Phil Grutzmacher, an economist, said the current wage tax of 4.46 percent would be less burdensome if the city excluded from taxation the first several thousand dollars an individual earns.
Bustleton’s Ruth Horwitz, an attorney and educator, asked the board to preserve funding for the School District of Philadelphia in considering their recommendations.
Bustleton’s Jim McGettigan was most angry at the Board of Revision of Taxes, calling the agency a “fraud.” McGettigan and others believe BRT officials tax properties in an inconsistent, unfair manner.
“They don’t know that they don’t know what they’re doing,” he said.
Rhawnhurst’s Ed Kelly called the Northeast the “stepchild” of the city when it comes to at-large Council representation and funding for cultural programming like the Pennypack Park Music Festival.
Feltonville’s Jim Robb termed the 10-year tax abatement for new construction a “rip off.” He believes many buyers will sell the property once the 10-year period ends.
Robb complained that property taxes rise for longtime residents of neighborhoods that see an influx of expensive housing. He also balked at paying higher property taxes in Feltonville.
“The neighborhood’s been going down for years,” he said.
Robb believes the city can increase revenue by going after long-abandoned properties.
“That horse left the barn a long time ago,” said Schwartz, adding that it’s nearly impossible to track down owners of some vacant properties.
Realtor Terry Devlin, of Lawndale, suggested a reduction in the real estate transfer tax for people who sell one home in Philadelphia and buy another in the city.
At present, the transfer tax is a whopping 4 percent. The city gets 3 percent of all sales, with the state getting the other 1 percent. The seller and buyer share the expense.
Forkin told Devlin that commission member Brett Mandel, director of fiscal and policy analysis for the city controller’s office, is addressing the transfer tax.
Unlike Cunningham and Robb, Devlin supports the tax abatement program, pointing out that wealthy homeowners pay a lot in wage taxes. ••
Reporter Tom Waring can be reached at 215-354-3034 or twaring@phillynews.com