Are the Mayor's technology firm tax incentives not enough? - Technical.ly Philly

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Mar. 22, 2010 5:21 pm

Are the Mayor’s technology firm tax incentives not enough?

It’s been a few weeks now since Mayor Michael Nutter announced a tax incentive pilot for technology firms aimed at decreasing sales tax for service-based tech companies and, ultimately, attracting more businesses to Philadelphia. For as much as we’ve heard support for the decision to eliminate taxes on sales outside of Philadelphia, there’s been criticism […]

It’s been a few weeks now since Mayor Michael Nutter announced a tax incentive pilot for technology firms aimed at decreasing sales tax for service-based tech companies and, ultimately, attracting more businesses to Philadelphia.

For as much as we’ve heard support for the decision to eliminate taxes on sales outside of Philadelphia, there’s been criticism from local entrepreneurs that maybe the tax pilot isn’t much of an incentive at all, but it will help retain companies that are already here, some say.

Damon Alberts, whom with the Videogame Growth Initiative has helped lobby city and state government officials for the last year to create more opportunities for small video game studios in the city, praised the decision but said more work needed to be done. It’s by no means an end result, but a “step in the right direction,” he says.

“I wouldn’t call it an incentive, because really they’re removing a barrier. Now I don’t have to pay a tax that I shouldn’t have to pay anyway,” he told Technically Philly in a telephone interview in early March. Alberts was gearing up for a trip to Game Developers Conference in San Francisco, a popular annual gathering for the industry.

“It’s a step in the right direction because video game firms are on the Mayor’s radar,” he says.

Alberts leads Burst Online Entertainment, a small firm with offices at 15th and Walnut, where seven employees are housed at eCity Interactive‘s office, with six more based in Mesa, Arizona.

The teams are working on a browser-based massively multiplayer strategy game and building a custom engine with several third-party technologies with the hopes of publishing a complete browser platform that it could eventually license to other indy developers.

Along with VGI, Albert met with the Chamber of Commerce after the Mayor’s announcement to investigate next steps, like packaging incentives, like this one, that are already in place.

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“There’s an incentive that every new hire brings a local tax credit of $3,000. Not a lot of people know about it,” he says. “We’re working with government to help them package [incentives] and make them look pretty.”

Albert and VGI are on “step two” of their lobbying process. The first, to educate government officials, has made strides. The second, convincing local and state government to unveil competitive tax incentives, is only coming to head. Albert cautioned that Philly ought not lean on budget crisis concerns when pooh-poohing business tax restructuring.

“Once you start talking about financial incentives, you hear ‘that’ll never work, that’ll never happen. The city’s broke and bankrupt'” he says. “While you’re crying poor, all these other cities and states are doing things to attract tech employees.”

It appears that in general, the Mayor is looking beyond some of these concerns. Along with the tech tax pilot, Nutter announced in his Budget Address early this month that a significant $120 million investment would be made into city I.T., to improve online city services and address aging infrastructure, signs that technology is a priority.

But when we spoke to Mike Worth, a founder of VGI, late last month after the announcement, he too, agreed that there’s a lot of work to be done. “This has been baby steps. The next step is to get incentives at the state level, and there’s already stuff moving at that level. Philly is a big first step. But there’s a long road ahead.”

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