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City Council Considers Lowering Tax Penalties For Deadbeats, Hoping They Pay Up

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file photo (credit: Tim McLaughlin)

file photo (credit: Tim McLaughlin)

Mike Dunn Mike Dunn
Mike Dunn is City Hall bureau chief for KYW Newsradio 1060. He covers...
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By Mike Dunn

PHILADELPHIA (CBS) – City Council is moving toward lowering the interest rates and penalties paid by tax delinquents, in hopes of getting more of them to pay up.

Philadelphia is owed hundreds of millions of dollars in back taxes. But, at a council committee hearing, Matt Melinson of the Pennsylvania Institute of Certified Public Accountants said the city’s interest and penalty rates on deadbeats make it too hard for many to pay up.

“The interest and penalty is, in short, far higher than the norm around the United States of America, far higher than the federal norm, the Commonwealth of Pennsylvania, possibly everywhere.”

Melinson spoke in support of a Nutter Administration proposal to lower the interest and penalty rates for deadbeats. The interest rate would go from the current 12 percent down to five points above the federal short-term rate. The penalty rate would about 15 percent per year, compared to the current rate, which is nearly three times that.

Revenue Commissioner Keith Richardson said the lower rates would make the tax deadbeats more likely to pay back. “I think they’ll be more likely to pay back.”

Bob Hornick of the PICPA agreed. “Perhaps that was looked at the big stick that was needed to get taxpayers to the table and get them to pay, but today it’s way out of line.”

The measure was approved in Committee and goes to the full council for a vote later this month.

Much of money owed to the city has been owed for decades and will likely never be recovered.

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