Use and Occupancy Tax Hike Dead

Councilwoman Maria Quiñones Sánchez said she would not call for a vote on her bill to increase the business Use and Occupancy tax during Thursday’s final Council meeting before the summer recess.

The bill would have raised about $30 million toward solving the School District of Philadelphia’s $304 million budget crisis. Council raised that tax last year as well, and the business community fought against a second straight increase.

Instead, Council and the Nutter administration will rely solely on improved tax collections and the creation of $2-a-pack cigarette tax – that needs state approval to enact – to raise $74 million for the schools.

State lawmakers are debating a $100 million funding package for the schools, and Sánchez said she did not want to “give anyone an excuse who is not looking out for the best interests of Philadelphia” to not provide the full $100 million.

“Harrisburg is very, very close to what would be a historic, one-time, serious allocation of resources to the school district,” she said, noting that Gov. Corbett faces reelection next year. “If there’s an opportunity for them to correct what has been a trend in the last two years about removing funding from the school district, this is the year. I want to hold them accountable to that.”

If Sánchez had called for a vote, she also would have put some of her colleagues in the difficult position of choosing between funding the schools and satisfying business constituents.

“There’s no need to put them in a situation where they’re voting for something (unpopular) when it’s Harrisburg’s turn,” she said.

Another provision in her bill, which gives businesses a $2,000 exemption on their Use and Occupancy taxes, has been amended into another bill setting the tax rate for next year. That exemption, Sánchez said, means 9,000 businesses will pay nothing or very little in Use and Occupancy taxes next year.

Part of the tax’s calculation involves the value of the property where a business is located. Because of Mayor Nutter’s property tax reform, the Actual Value Initiative, small businesses had been facing big increases in Use and Occupancy taxes.

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