Local tax lacks logic

P hiladelphia's population has fallen fairly steadily for the past half century. As the enormous factories that once sustained entire neighborhoods began to pack up and close shop, the city was slow to respond to the changes that would result in more than half a million residents fleeing the city.

In 1985, the municipal government, desperately seeking a way to fill city coffers, began taxing businesses simply for the right to conduct business in Philadelphia.

We are the only major American city that taxes both gross revenues and net income.

Finally, after 20 years of continued population and job loss -- especially outside of Center City in neighborhoods like Kensington and North Philadelphia -- the city council is taking notice.

Except, as usual, bickering and failed leadership may prevail over logic.

Councilman Michael Nutter recently proposed to phase out the burdensome business-privilege tax. In response, Mayor John Street has threatened to veto the bill, and Jannie Blackwell -- who represents West Philadelphia, which includes the University -- has drafted a competing proposal.

Blackwell's proposal is utterly ineffective.

Instead of repealing the business tax, her bill immediately reduces the tax from 6.5 to 6 percent, but must be re-approved every year.

Nutter's proposal -- which only drops the tax to 6.3 percent -- will be permenant.

With Philadelphia workers already paying a steep wage tax, the city must be doing all it can to encourage businesses to return to the city. Officials can play up Center City all they want, but vibrancy won't return to the entire city until the jobs do.

Making Philadelphia -- which was ranked by Inc. magazine 265th out of 274 for the best American cities in which to do business -- a great place to conduct business again will require sacrifices.

If the business tax is scaled back or repealed, services will undoubtedly have to be cut. But politicans must utilize creative leadership and look beyond the next election cycle to do what is in the best interest of the city.

Nutter's proposal does not go nearly far enough, but any permenant step is better than a one-time cut -- which will do little to encourage business because Council could easily reinstate the tax at its whim.

A short-term cut in taxes and services will likely lead to a long term rise in jobs, population and tax base.

As the largest private employer in Blackwell's district and the entire city, Penn must put pressure on Blackwell and Mayor Street to work with City Councilman Nutter on this issue.

Penn will be around long after Mayor Street leaves City Hall, and working to eliminate the business privilege tax could help keep graduates within city limits after they leave the University -- greatly enhancing Penn's connection to and reputation in the city.

This city will never again produce the goods it once did, but it may yet see jobs come flooding back if the tax burden is lowered.

If only city leaders make it happen.

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