Philadelphia business owners are learning about City Councilman Bill Green’s proposal to raise a tax on commercial properties to fund the Philadelphia school district, and the idea is proving controversial.
Green proposes nearly doubling the city’s use and occupancy tax, an obscure levy on businesses that provides funds for the school district.
He says that’s necessary to compensate for the huge tax break businesses will get from Mayor Michael Nutter’s proposal to overhaul the city’s property tax system.
“Commercial and industrial property owners will get a huge, as far I know, unintended decrease in taxes at the expense of residential property owners,” Green said Monday before he introduced the tax proposal at a City Council hearing.
Green’s conclusion is based on calculations that assume business property assessments under the current property tax system are closer to their real market value. The Nutter Administration says more information is needed to determine whether the property tax plan will yield the business tax windfall Green predicts.
Green proposes to raise the $94 million Nutter says the school system needs from the use and occupancy tax rather than property taxes, softening the impact of the Nutter plan on residential property owners.
The Greater Philadelphia Chamber of Commerce hasn’t publicly reacted to Green’s proposal yet.
But Robert Zuritsky, president of the Parkway Corporation that operates 50 garages and lots in the city, said in a phone interview he’s heard about Green’s proposal.
“I think this is a very serious impediment to attracting more businesses to our city,” Zuritsky said. “We have a structural problem with our business taxes. They kind of act as a wall that impacts businesses’ decisions to even consider moving into Philadelphia.”
City Council President Darrell Clarke says it appears Nutter’s plan gives businesses a tax break, which presents a dilemma for City Council.
“Do do you shift additional (tax) revenues onto commercial and industrial (properties), and then take away the proposed business-friendly environment?” Clarke said. “There’s a balancing act, but at the end of the day, we represent individuals who live in homes, and we have to be sure we have to provide adequate protective measures.”
Clarke has proposed several bills which would ease the impact of the Nutter tax plan on low-income taxpayers and homeowners in gentrified neighborhoods.
Council is required to enact a city budget by the end of May.