By Mike Dunn

PHILADELPHIA (CBS) — A City Council committee today okayed a major change in Philadelphia’s primary tax on businesses.

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But any final vote may not come for many months.

Councilman Bill Green says he wants to overhaul the city’s main business tax, the Business Income and Receipts Tax.  He proposes eliminating the portion of that tax that applies to net income, and boosting the portion that applies to gross receipts, with total revenue from that tax unchanged over five years.

This, he says, would benefit businesses that are based in the city:

“We would be shifting $60 million of our $360-million tax burden from Philadelphia-headquartered and based businesses, to businesses that are not headquartered and based in Philadelphia — businesses like Home Depot, Target, Lowe’s, who currently claim no profits in the City of Philadelphia.”

At a Finance Committee hearing today on the plan, Rob Dubow, the mayor’s finance director, said the administration plans to study the idea further.

“Until those analyses are done, we won’t have an opinion on the bill,” Dubow told the councilmembers.   “Those analyses will frame our view on the bill.   There will be definitely be people who pay more and people who pay less.  And what we want to see is who they are, and what the impact on the economy is.”

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But Green’s idea is a good idea, according to some accountants who testified at the hearing.
“I’ve had so many interactions with small business owners — and large, international business owners — that want to operate in the City of Philadelphia, and they are scared to death of the tax structure,” said , Karen Facer-Mee, a CPA based in Bucks County.

And Glen Shinner, also a CPA in Bucks County, said paying the net income portion under the current structure is difficult for many firms.

“It just comes right off the top, and that can be a big difference, especially for lower-margin type businesses.  It’s money that goes either to reinvest in the business, or that’s going to go to the owner, or that they can afford to pay employees,” he said.

The Council committee approved the Green plan, but the councilman agreed not to call for a final vote by the full Council before the administration’s study is complete.


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