Michael Potter, Managing Editor | Philadelphia Business Journal
Jun 16, 2022
Philadelphia City Council approved a $5.6 billion budget for fiscal year 2023 in a preliminary vote late Wednesday, reaching a deal with Mayor Jim Kenney that includes cuts to both business and wage taxes.
The deal also takes steps to mitigate the impact of increased property taxes following a recent reassessment that found a 21% aggregate jump in property values citywide since 2020.
The final budget, approved by unanimous vote, will have its first reading in a Council meeting on Thursday and is expected to be passed on June 23.
Kenney's call to reduce the city's wage tax was taken up by Council, with the rate for residents set to decline from 3.83% to 3.79%. Non-residents who work in the city will see their wage tax rate decline from 3.448% to 3.44% under the approved budget. Kenney had proposed reducing the tax for city residents to 3.7%.
The budget deal also calls for a decrease in the city's Business Income and Receipts Tax (BIRT) on net income from 6.2% to 5.99%. The move comes after months of lobbying in City Hall by the Chamber of Commerce for Greater Philadelphia and other businesses advocates. Chamber CEO Rob Wonderling continued to urge the organization's members to voice their support for tax cuts in the days leading up to Wednesday's vote.
"We firmly believe that reductions in wage and business taxes will lead to more jobs, more business-to-business commerce, an increased tax base for healthcare, education, and public services, less poverty, and more overall dollars flowing throughout Philadelphia," Wonderling wrote in a message to Chamber members on Saturday.
Council also approved an increase in the city's Homestead Exemption from $45,000 to $80,000, almost doubling the amount of a property's assessed value that is exempt from property taxes. That equates to an annual tax savings of $1,119 for the average Philadelphia homeowner, according to Council.