Northeast Times

Council supports business tax breaks

Coun­cil­wo­man Maria Quinones-Sanc­hez backed bills to trim busi­ness taxes.

The re­duc­tions will be more mer­chant-friendly, but they aren’t go­ing to hap­pen overnight.

City Coun­cil last week passed a pair of bills de­signed to make it easi­er — and cheap­er — to do busi­ness in Phil­adelphia.

The bills, which earned the sup­port of the Nut­ter ad­min­is­tra­tion earli­er last month, will re­duce the fees the city charges new busi­nesses and soften the busi­ness-priv­ilege tax.

The tax re­duc­tions ad­dress com­plaints long made by the busi­ness com­munity. Any meet­ing of Phil­adelphia busi­nesspeople usu­ally in­cludes some sort of lam­ent­a­tions of how dif­fi­cult and ex­pens­ive it is to op­er­ate in the city. 

Coun­cil­man Bill Green (D-at large), who co-sponsored one of the bills, said the le­gis­la­tion, when fully in place, will mean a 20-per­cent tax de­crease for busi­nesses. And, he said, half of the $50 mil­lion an­nu­al re­duc­tion will be for small busi­nesses.

“It’s a his­tor­ic cut,” he said. “It’s huge.”

Coun­cil passed the meas­ure un­an­im­ously.

Those big boosts to busi­ness won’t be im­me­di­ate. The meas­ures will have gradu­al im­pact dur­ing the next few years. That’s something May­or Mi­chael Nut­ter wanted. The tax changes will erase mil­lions in rev­en­ues that have to be re­placed, and that all has to be figured in­to suc­ceed­ing budgets, plan­ning and policies.

So, busi­ness own­ers will see a gap of years between Nov. 3, 2011, when Coun­cil mem­bers pro­nounced what they want the city to do, and when the city ad­min­is­tra­tion be­gins phas­ing it in by Ju­ly 1, 2013.

In a nut­shell, the meas­ure sponsored by Green and Coun­cil­wo­man Maria Quiñones-Sánchez (D-7th dist.) would mean no busi­ness-priv­ilege taxes for more than 30,000 busi­nesses. More than 40,000 oth­ers would see the tax re­duced. 

Also, city busi­ness taxes would be levied only on sales with­in the city, which they said could en­cour­age busi­nesses to loc­ate in the city.

So, a Phil­adelphia man­u­fac­turer wouldn’t pay on what is sold out­side the city, and a ca­ter­ing com­pany that is based on, for ex­ample, Bustleton Av­en­ue wouldn’t pay on jobs done in New Jer­sey. 

A com­pan­ion bill sponsored by an­oth­er Demo­crat­ic at-large mem­ber, James Ken­ney, tosses out busi­ness-star­tup fees that could amount to thou­sands of dol­lars and gives new busi­nesses two-year breaks from city taxes if some of their work­force in­cludes at least three Phil­adelphia res­id­ents.

Quiñones-Sánchez said the meas­ures rep­res­ent tax fair­ness and gen­er­ate “eco­nom­ic growth by re­mov­ing some tax-re­lated dis­in­cent­ives to loc­at­ing and ex­pand­ing busi­ness in the city.”

She said the drop in rev­en­ues will not be re­flec­ted in ser­vice cuts and that Coun­cil will work with the may­or to bal­ance the city’s budget.

“This is the largest tax re­form in the his­tory of the city,” Green said. “It sends a mes­sage that we un­der­stand it’s busi­ness that cre­ates jobs.” ••

Re­port­er John Loftus can be reached at 215-354-3110 or jloftus@bsmphilly.com

You can reach at jloftus@bsmphilly.com.

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