December 7th, 2010

Last month, City Council held a public hearing on a proposed bill that would shift the business tax burden from the net income tax, to the gross receipt tax, which taxes sales. However, due to the complex nature of the proposal, City Council has decided that there will be no action for now. 
 

The Philadelphia Inquirer reported on December 2, 2010:

 Too “dense” to digest over the course of a two-day hearing, a controversial proposal that would profoundly alter the way Philadelphia taxes business will see no City Council action for at least two weeks, ensuring that it will not pass before year’s end.

Fellow Council members are clearly intrigued by the bill from Council members Maria Quiñones Sánchez and Bill Green, which purports to shift a third of Philadelphia’s $368 million business-privilege tax burden to companies outside of the city.

Over 11 hours of hearings Tuesday and Wednesday, the sponsors presented their plan to shift the focus of taxes from business profits to business sales.

The two-week delay will allow opponents to ramp up their lobbying efforts, and sources privately worried Wednesday that the bill had missed its best chance to come out of committee. Green and Sánchez said they would continue to make their pitch that the bill would help small city-based businesses, and encourage companies to build headquarters here without worrying about giving back a chunk of their profits to the city.

Of the $368 million in business-privilege taxes collected in the last fiscal year, about 75 percent was taken from company profits, or net income, and 25 percent from sales, or gross receipts.

For the full story from the Inquirer, click here.

The City of Philadelphia has offered the following information for those that are interested in learning more about the proposal:

The proposed bill has many components and within the same industry there are winner businesses and loser businesses. In order to understand the impact of the proposal on your business’s tax liability you are encouraged to contact your tax professional. If you have questions on the Administration’s analysis please contact Lauren Vidas, Assistant to the Finance Director at (215) 686-0320 or Lauren.Vidas@phila.gov. You may also contact Councilman Bill Greens office sponsor of the proposed bill or Councilwoman Maria Sanchez, co-sponsor.

We will continue to follow this proposed bill and update you on the latest scheduled meetings.