Eliminating start-up fees, lower privilege tax get bipartisan support
Two tax bills — intended to eliminate business start up fees and cut the city’s business privilege tax — moved out of committee this week.
Both had council leadership’s stamp of approval and the endorsement of the mayor.
“At the end of the day we were all seriously working to make sure that our businesses seriously benefit in the city of Philadelphia,” said Majority Leader Marian Tasco, at a press conference late Monday afternoon, held to announce that both bill had been approved by the finance committee.
High business taxes and licensing fees have long been blamed for pushing business from the city to the suburbs.
In combination, the bills were expected to cut taxes by more than $70 million.
“The proposals in front of us today are the kinds of things we’ve been in favor of,” said Mayor Michael Nutter, who took the unusual step of publicly endorsing the tax measures before they were presented to the full council. “We’re still in challenging economic times, but we need to do something to jump start our own situation.”
The first bill, sponsored by Councilman Jim Kenney, would waive the business privilege tax for new businesses that employ at least five city residents full-time in their first year, and add five full-time jobs, again for city residents, in the second year. In addition, the $50 business privilege license fee would be waived, as would all related business license fees.
The business privilege tax is 1.415 mills on gross receipts (one mill equals one tenth of one percent) and 6.45 percent on taxable net income. In addition, new businesses pay licensing fees ranging from $50 to $500 before they can open in the city. Those fees would be waived — though the licenses would still be required.
Kenney, who said that while official unemployment figures put unemployment at 11 percent, that number is probably closer to 25 percent, adding that he hoped the bill would spur job creation in the city.
“I think the problem we’re facing in this country and in this city is unemployment,” he said. “These two bills will hopefully break the jam. To allow people, again, to think about coming to the city and staying in the city.”
A second, sponsored by council members Bill Green and Maria Quinones-Sanchez, would provide a $100,000 exemption on the gross-receipts portion of the business-privilege tax and exempt the first $100,000 in sales for the net-income portion on the first $100,000 in sales. It also included a provision called single sales factor apportionment, taxing just sales made in the city.
“Philadelphia city government… sent a clear message to the business community in the region and the nation: Philadelphia is open for business,” said Green. “We want you here. We want you to create jobs here.”