Wednesday, July 29, 2015

AVI delay offers chance to revamp city taxes

With the budget behind them, Mayor Nutter and City Council have a rare opportunity to craft sweeping tax and government spending reforms.

AVI delay offers chance to revamp city taxes


With the budget behind them, Mayor Nutter and City Council have a rare opportunity to craft sweeping tax and government spending reforms.

Though Council wisely postponed a new property tax system based on the actual value of properties until the numbers are in, members cannot waver from their commitment to the Actual Value Initiative (AVI), the most extensive tax reform in decades.

An ambitious restructuring of taxation as well as government spending is not as difficult as it may seem. Most of the homework was done in 2003 the then-Councilman Michael Nutter won a voter referendum to create the Tax Reform Commission, which conducted a far-reaching analysis of the city’s tax system and its effects on the economy. He completed a curtailed version of that civic exercise shortly after being elected mayor and the new commission confirmed the findings of the old one.

Nutter is close to implementing a major recommendation by creating a fair property tax system. Another significant recommendation was to trim the wage tax which now stands at 3.9 percent for residents and 3.5 percent for nonresidents.

Should city use 1-year delay in full-value assessments to revamp its tax structure?
Yes, anything to deal with Philly's status as one of the most-taxed cities in nation
No, that's going to complicate an already messy situation
Yes, you need to take off your shoes to count up all the ridiculous city taxes
No, the resulting tax structure might even be worse

He is committed to resuming wage tax cuts in 2014, according to his Five Year Financial and Strategic Plan.

Nutter and Council have proven they can work together on some tax issues. Earlier this year, they trimmed business taxes and fees, particularly for start-up companies. But the system remains complex with too many varieties of taxes, including ones on amusements and car rentals.

Tax cuts are tough to negotiate in a city coping with increasing crime and social service costs and a deeply troubled school district, but they are a key to fostering growth. Still, the city cannot be expected to make cuts it can’t afford.

Tax reform cannot come without changes in government spending. Investing money in better tax collections, to mine the $515 million the city is owed, is a good start. Finishing the long overdue contracts with blue- and white-collar workers would save money on benefit costs.

Although potentially unpopular, it is time for a serious rightsizing of the city’s infrastructure. In the 1950s and 1960s, Philadelphia kept building to accommodate a peak population of 2.1 million, but now it has 1.5 million residents. Elected officials must swallow the bitter political pill of cutting firehouses and recreation centers as well as figuring out which services must go.

All this maneuvering has to happen quickly because four Council members are considering a run for mayor in 2015. Once the race engages, they will be less likely to take the political risks of changing the tax and spending structures.

With its first population increase in 60 years, Philadelphia is slowly moving in the right direction, as young people chose city life over the suburbs. Leaders must build on the momentum of attracting new middle-class residents by rationalizing the wage and business taxes and rethinking the government. 

We encourage respectful comments but reserve the right to delete anything that doesn't contribute to an engaging dialogue.
Help us moderate this thread by flagging comments that violate our guidelines.

Comment policy: comments are intended to be civil, friendly conversations. Please treat other participants with respect and in a way that you would want to be treated. You are responsible for what you say. And please, stay on topic. If you see an objectionable post, please report it to us using the "Report Abuse" option.

Please note that comments are monitored by staff. We reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable. Personal attacks, especially on other participants, are not permitted. We reserve the right to permanently block any user who violates these terms and conditions.

Additionally comments that are long, have multiple paragraph breaks, include code, or include hyperlinks may not be posted.

Read 0 comments
comments powered by Disqus
About this blog

The Inquirer Editorial Board's Say What? opinion blog showcases the work of the editors and writers who produce the newspaper's daily and Sunday opinion pages.

Find out more about The Inquirer's Editorial Board here.

The Inquirer Editorial Board
Also on
letter icon Newsletter