The mayor is still in the middle of delivering his budget, but we've already gotten press releases from big business movers and shakers at the Chamber of Commerce, who praise him for not raising wage or business taxes. They don't love the tax increases that are included, but they acknowledge the mayor has few attractive options. Press release follows:
DAVID L. COHEN, CHAIRMAN OF THE GREATER PHILADELPHIA CHAMBER OF COMMERCE:
We commend the Mayor for making the hard choices that are embedded in his “shared sacrifices” budget. This budget has something that everyone can dislike – tax increases, service reductions, the need for concessions in the City’s labor agreements, a close look at consolidation of a number of row offices, and more. But the Mayor has proposed a balanced budget that preserves critical City priorities – and if we all simply object to the portions of the budget that impact our individual priorities, we will be left with a bankrupt city government.
While never an advocate for tax increases, the Chamber commends the Mayor for his judgment in not raising either the Wage or Business Privilege taxes. History has shown that these two taxes, when increased, have choked off growth and have forced many Philadelphians to relocate their homes and businesses. Increases in the wage tax were considered the main culprit in the loss of some 270,000 jobs in the City after 1970. Since then, we have made progress in shedding our reputation as a high-tax city and we cannot allow old perceptions to be reintroduced and erode our long-term competitiveness. We also applaud the Mayor for sun-setting the proposed increases in both the Sales and Real Estate taxes as a concrete measure of his pledge that both increases would be temporary.
We also recognize that this is the beginning of a process in which there will be much debate and discussion in both City Hall and Harrisburg. We look forward to working with our elected officials in the coming weeks to assure that the final City budget reflects a careful balance among quantifiable savings and efficiencies, manageable service reductions, appropriate savings in the City’s labor agreements, and revenue increases as necessary and in such form to continue the City and region on a path to long-term prosperity.
MARK S. SCHWEIKER, PRESIDENT & CEO OF THE GREATER PHILADELPHIA CHAMBER OF COMMERCE:
The Greater Philadelphia Chamber of Commerce recognizes the unprecedented economic challenges that were reflected today in Mayor Nutter’s Budget address to City Council. Like the rest of Philadelphia, we wish that the measures articulated by the Mayor were not necessary, but the realities of the global financial meltdown require an equally significant response from the City.
With the City of Philadelphia’s budget facing a projected deficit of more than $1 billion, this is a time for courageous decisions and hard choices. We applaud the Mayor for his efforts to propose a financially prudent and socially responsible budget that includes management efficiencies, spending cuts, and revenue increases. There’s no doubt we all will share in the pain of these decisions.
In November, the business community voiced its support for Mayor Nutter’s decision to halt reductions of the business privilege tax and wage taxes until FY15 as long as the municipal budget reflected shared sacrifices. This support did not come lightly: a Wharton professor estimates that while each rate cut adds more jobs, stopping the tax cuts this year will cost the City’s private economy 2,500 jobs.
So while we wish there would be no need for any tax increases, we strongly endorse the Mayor’s judgment not to increase the Wage or Business Privilege tax.
While we think it’s important for there to be a full discussion and debate around the Mayor’s proposed budget, we want to be clear up front that Philadelphia’s business community will strongly oppose any increases in the Wage or Business Privilege taxes. Philadelphia, which already taxes business higher than every city in America except New York City, cannot absorb the blow that higher wage taxes would inflict.
As the Tax Reform Commission stated in its final report in 2003: “In sum, a broad array of evidence points to the conclusion that reducing Philadelphia’s reliance on wage and business taxes could significantly increase the size of its economy while maintaining a tax revenue stream adequate to finance needed public services.”
This is not to say that the business community is unwilling to shoulder its fair share of the burden in this difficult budget. We have already pledged enormous pro bono resources to the Administration as it grapples with identifying remaining efficiencies in the operations of the government. And the business community has stepped up time and again to supplement City dollars with private dollars for critical City priorities.
Moreover, because about 50 percent of the real estate tax revenue is paid by commercial property owners, the business community is clearly impacted by the Mayor’s proposal to raise property taxes. Combined with our support of the temporary suspension of Business Privilege and Wage tax cuts last fall, this signals our willingness and recognition that the short-term sacrifices must be shouldered by all.
As our elected officials grapple with this budget crisis, we urge them to use a scalpel to pare non-essential government functions, but to keep in mind that the city will need a strong business community to recover from this recession.
Click here for Philly.com's politics page.