This article originally appeared on The Philadelphia Tribune.
City Council’s lone independent legislator has called for wiping out the city’s 10-year property tax abatement.
At-large Councilwoman Kendra Brooks, of the Working Families Party, proposed a bill on Thursday that would completely eliminate the controversial subsidy for both new construction and the rehabilitation of residential and commercial properties.
Brooks said the legislation was part of a package, which included a proposal to levy taxes on intangible property like stocks and other financial assets, that would “ensure everyone in the city is paying their fair share.”
Brooks contended the current tax abatement accelerates gentrification and “primarily benefits luxury developers and wealthy newcomers, many of whom are white,” and has driven up home prices for Blacks and people of color for generations.
The legislation was referred to a council committee. A hearing has yet to be scheduled.
The bill would go beyond the reforms the former 17-member City Council adopted last year, which will effectively cut the abatement in half.
Starting in January 2021, the abatement for new residential construction developments will pay no property taxes on the added value in the first year, 10% in the second year, 20% in the third year and so on until they are paying the full tax assessed on the property. Abatement recipients pay taxes on the value of the land.
In addition, the economic free fall stemming from the novel coronavirus pandemic has created new challenges for the city, Brooks said. The pandemic has blown a $649 million hole in the city’s budget.
“If we are truly committed to dismantling oppression in Philadelphia, we must respond to the structural racism with structural changes,” Brooks said.
Brooks’ proposal to tax intangible property would revive a 20th-century city tax, which suffered from lax enforcement and was repealed in 1997. The proposed tax on stocks, business trusts, mutual funds, bonds and other financial instruments could potentially raise $50 million a year, according to Brooks’ office.
An old debate reopened in a new political moment
The first-term council member said the bills would advance racial equity.
“For years, working-class and poor communities of color have been starved of wealth and resources into systemic racism,” Brooks said.
“Homeownership is one of the main determinants of wealth and through red-lining, gentrification, evictions and foreclosures many Black communities have been deprived of this opportunity.”
It remains to be seen whether members of City Council have the political appetite to debate changes to the decade-long tax abatement again.
The effort to reform the 10-year tax abatement had progressed in fits and starts over nearly two years in the previous City Council before legislators rushed to approve the changes during the last session of the term in 2019.
The changes to the abatement program adopted last year were the first since 2000. Several attempts to alter the program before last year had failed.
The building lobby fought last year’s reforms and strongly opposes any further changes to the program. The Kenney administration cast doubt on reforming the abatement over concerns of lost revenues and successfully strong-armed City Council into delaying the start date of the current reforms.
The tax abatement program became a contentious issue during the 2019 primary election, when many political newcomers, including Brooks, called for eliminating it entirely.
The tax abatement program exempts property owners from paying city and school taxes on the added value from new construction or rehabilitation of both residential and commercial properties for a decade. Abatement recipients do pay taxes on the value of the land.