Philadelphia’s budget crisis all but ended the tax-cutting efforts begun in the early 1990s that are credited with revitalizing Center City and many neighborhoods. So a recent task force report urging a revival of reform comes at an opportune time.
If nothing else, the report provides a stark reminder that — barring renewed cuts — the city will continue to bleed jobs and businesses, even if it somehow slows the long-standing exodus of middle-class residents.
Those predictions should serve as the counterpoint to Mayor Nutter’s retrenchment on wage- and business-tax cuts amid the city’s budget crisis. Not only have tax cuts been delayed, but the city’s sales tax was increased by 14 percent. As such, the city’s overall tax burden remains the highest in the country, and holding.
The mayor’s panel, chaired by Harold Epps, president of PRWT Inc., offers a multipronged strategy that could help alter an otherwise grim economic future. It calls for a commonsense shift of local taxes away from wage earners and businesses, relying more heavily on property taxes while also cushioning the blow for homeowners.
Just as important, the report recommends trimming city spending by 5 percent a year through efficiencies and limiting pension costs. Anyone who thinks that can’t be done hasn’t spent much time examining the Byzantine and patronage-laden operations at City Hall.
Together, the reforms could lead to 70,000 more private-sector jobs over 15 years — a roughly 10 percent improvement over current levels.
While worthy, the proposals are similar to a six-year-old report that went nowhere. So turning the reforms into reality will require mayoral leadership.
But Nutter accepted the report last week with a lukewarm endorsement. He singled out the recommendation for a tax amnesty program as promising, but that was about it.
Before any changes to property taxes, of course, Nutter and City Council need to fix the city’s broken tax-assessment process.
That requires scrapping the Board of Revision of Taxes, which is riddled with mismanagement, cronyism, and flawed property assessments, as detailed by The Inquirer this spring. So far, a plan to switch to marketplace-value assessments has problems and is well behind schedule.
The Nutter administration has time to formulate a tax-reform plan, but not much. Indeed, just after the tax-reform report was released, City Councilman Bill Green called for the city to aim higher.
Green, whose own paperless-government initiative fits the bill for a 5 percent savings measure, rightly questions whether the proposals are aggressive enough to reverse job and resident losses or the city’s growth in the number of residents living in poverty.
That said, driving the wage tax down below 3 percent would represent real reform. There are other worthy ideas out there as well, such as the one from Green and his Council colleague, Maria Quiñones Sánchez, to restructure the gross-receipts business tax.
But what’s missing is a sense of urgency akin to the 2002 “briefcase brigade” of business leaders at City Hall. With the task force’s proposals in hand, it’s time for Nutter and Council to get serious again about tax reform.