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 firstname.lastname@example.org