Myth #1: Philadelphia can’t afford tax reform.
Reality: The City of Philadelphia can afford meaningful tax reform; it cannot afford continued loss of jobs and residents.
We have consistently shown the ability to find room in the city budget to fund new initiatives. We found funding for stadium finance and neighborhood transformation. Now we must make tax reform a priority. It may not be easy to reform the city’s tax structure, but it is a necessary step if the city is to enjoy a bright future. Maintaining the status quo is a recipe for continued long-term decline. In its report, Tax Policy, Job Growth & Neighborhood Transformation, the Central Philadelphia Development Corporation concluded, “If Philadelphia tries to avoid the daunting challenge of restoring competitiveness we will continue to erode the job base that is the foundation for neighborhood stability and municipal services.”
Philadelphia City Controller Jonathan Saidel declared, “Many wonder if the city can afford tax reform. It is clear we can’t afford not to do it….I can firmly assert that the Tax Reform Commission’s proposals are fiscally responsible.” (Council of the City of Philadelphia Public Hearing before the Committee of the Whole, Wednesday, February 25, 2004.)
Joseph Vignola, Executive Director of the Pennsylvania Intergovernmental Cooperation Authority — the city’s state-appointed fiscal oversight board — said, “The strength of the Commission’s report is that it makes considered attempts to implement these changes while allowing for the current projected growth in the City’s Five-Year Plan….the Tax Reform Commission’s report offers a program for responding to future revenue shortfalls.” (Council of the City of Philadelphia Public Hearing before the Committee of the Whole, Wednesday, February 25, 2004.)
Philadelphia’s burdensome tax structure drives employers and residents from the city, forcing those left behind to shoulder the burden for the cost of government. Through implementation of incremental tax cuts and changes, the city can gradually adjust the budget and react to changing economic conditions. The Tax Reform Commission was charged with making fiscally responsible recommendations and worked to make sure that its recommendations will not compromise delivery of city services. The Commission’s analysis shows that tax reform will create tens of thousands of jobs and hundreds of millions of dollars of investment in communities across Philadelphia. This growth should make tax reform “pay for itself.” Any short-term fiscal gaps could be filled through budgetary discipline or the addition of new revenue streams.
By enacting the recommendations of the Tax Reform Commission to eliminate the Business Privilege Tax, reduce the Wage Tax, and reform the Real Estate Tax, we can create a bright future for Philadelphia — truly, we can’t afford not to.