Philadelphia Tax proposal to impact commercial property owners

Commercial property taxes are usually pass through, operating expenses to the business tenants. So that means rents will be going up and the tenant pays and suffers. If the business taxes go down and property taxes go up, it is a wash or negatively effective for most commercial tenants in Philadelphia. Jim Kenney will be great for business growth in the Suburbs. -Joe O'Donnell

by Alison Burdo, Digital Producer, Philadelphia Business Journal

In a show of solidarity not seen in Harrisburg in quite some time, a bipartisan group of state lawmakers gathered in Philadelphia's City Hall Friday, along with Mayor Jim Kenney, and local civic and business leaders, to announce a legislative plan that would up the tax rate on the city¹s commercial properties while lowering wage and businesses taxes.
The bill, which would modify the state¹s constitution, aims to create up to 100,000 jobs in the city through a restructured tax system that is considered more attractive to business owners.

State Rep. John Taylor said the legislation would reposition the sources of Philadelphia¹s budget, making the city less reliant on wage tax ­ currently 3.92 percent for residents and about 3.49 percent for nonresidents.
"There is no other city in the Commonwealth as tied to the wage tax as Philadelphia," said Taylor, adding that Detroit is the only other major American city to have a model similar to Philadelphia¹s.

"And that is not company we want to be in," he said.
If the proposed changes make it through Harrisburg ­ a process that could take at least two years, it would allow Philadelphia to enact its own legislation "to assess real estate taxes on business properties at a rate up to 15 percent higher than the rate on non-business properties."
In turn, the wage and business taxes would be lowered. The rates would be reduced in sync with the raise in commercial property taxes ­ on a dollar basis ­ to prevent the creation of a funding gap, the lawmakers said.
No exact rates are named in the proposal. Kenney, however, said his goal was to lower the wage tax to less than 3 percent over the next 10 years. The proposal says the rate changes would move together and the commercial real estate tax could be as much as 15 percent higher, but no more, than the residential rate.
With the current residential rate of 1.3998 percent, the commercial rate could be as high as 1.6098.
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