Jennifer Rodríguez
Jun 20, 2024
These have been difficult years for small business owners — especially for many of the restaurants that are members of the Greater Philadelphia Hispanic Chamber of Commerce, which I lead.
While the pandemic might be in the rearview for most, its impact continues to be felt. The recovery has been unequal. Even as the citywide poverty rate has declined, Pew’s State of the City report indicates that a full third of Hispanic residents still live in poverty.
For small business owners, and restaurant owners in particular, the recovery process has been marked by challenges such as high inflation, rising interest rates, and a challenging labor market. Most have powered through, but the work is harder, the environment more competitive, and the businesses are less profitable. Good news about the economy hides the fact that jobs and numbers of restaurants are down from pre-pandemic levels. Fortunately, both our City Council and Mayor Cherelle Parker’s administration have taken steps to improve the business climate, but much more needs to be accomplished if we want to help small businesses thrive in this challenging economy.
On the administration’s side, Parker’s PHL Open for Business initiative is a long-needed investment in making it easier to open and operate businesses in our city. Obtaining permits and licenses should not be so daunting, and this is a welcomed initial step in what should become a continuous improvement process marked by accountability and measurable, time-bound goals.
So what needs to happen next? The good news is that we already have a roadmap.
During the pandemic, mandated closures caused severe hardship, especially for restaurants that could not derive income from their dining rooms yet had to pay their full use and occupancy tax obligations.
We successfully advocated to change this, and the city agreed to prorate the U&O tax during the emergency. This critical relief showed the government’s ability to adapt and support the local restaurant community. Furthermore, it demonstrated a commitment to practical, impactful policy interventions that can significantly alleviate the pressures on small business owners.
Entrepreneurship provides a path for wealth creation, and because of this, we need City Council to do all that is in its power to support them, including lowering, for the third consecutive year, the business income receipts (BIRT) and wage taxes.
Businesses pay BIRT whether they make a profit or not. Reducing or eliminating BIRT, as we have advocated for years, would go a long way toward alleviating some of the short-term challenges of running a small business — and make it easier to think about long-term investments, such as the streeteries that restaurants constructed but had to dismantle (and will hopefully be able to build again).
At the same time, reducing the city’s wage tax will allow businesses to hire more employees and expand faster. As the Greater Philadelphia Hispanic Chamber of Commerce works toward increasing the number of Latino-owned businesses with $1 million in revenue — a benchmark for scalability — a reduction in the city’s wage tax can be like a modest pay raise for employees.
After several years of hardship, there are actions within Council’s power that can ease the burden of doing business in Philadelphia. Not all solutions need to be overly complex or transformative to be meaningful. Incremental business tax reductions, when applied over time, will become substantial. These tax reductions, coupled with Mayor Parker’s initiatives, will ease the cost and burden of doing business for entrepreneurs — especially those who bring life and local dollars to our neighborhoods — helping grow in ways that expand opportunities for all.
Jennifer Rodríguez is president and CEO of the Greater Philadelphia Hispanic Chamber of Commerce.