Business Privilege Tax reform passes City Council

The tax reform legislation that promises relief for small businesses and businesses that do sales outside of Philadelphia has been passed by City Council.
Introduced by Councilpersons Bill Green and Maria Quiñones Sánchez, the Business Privilege Tax reform was passed unanimously today, after making its way last week through the council’s Committee on Finance.
From the press release:

“For three years, we have been working to further the goals of tax fairness; leveling the playing field for local businesses, including manufacturers; small business tax relief; and generating economic growth by removing some tax-related disincentives to locating and expanding a business in the City,” Councilwoman Sánchez explained.
Councilman Green continued: “City Council is sending a clear message that the City of Philadelphia is open for business. This legislation levels the playing field for businesses that sell goods. It is a large first step in the right direction. This bill will save existing jobs and create new jobs.”

Some of our previous coverage of the tax issue and the proposed legislation:

• Maria Quiñones Sanchez: Q&A with councilwoman on tax reform, digital divide and redistricting [VIDEO]
• Councilman Jim Kenney on tax policy amid a recession
• ‘Blogger tax:’ bill creating business privilege license exemption for ‘hobbies’ faces City Council vote [VIDEO]
• Nutter to Chamber: experiment with city biz taxes, retain tech firms
• David L. Cohen, Comcast Executive Vice President, talks Comcast, taxes and startups
• How do we retain technology startups in Philadelphia? [VIDEO]
• How to open a business in the City of Philadelphia, or 15 reasons people move to the suburbs
• Megan Wendell: “I felt that Philadelphia taxes were significantly holding back” our business

Green’s Chief of Staff Sophie Bryan tells Technically Philly that she’s “absolutely confident” that Mayor Nutter will sign the bill. The Nutter administration was a close partner in the bill’s working group. The Chamber of Commerce, an opponent of early versions on the bill, said it was ‘thrilled,’ in a report posted on its website.
After the jump, details of the bill from the release.

The legislation contains two main parts:

1. an exemption from the gross receipts and net income parts of the BPT for the first $100K of receipts of all businesses; and
2. putting in place “single sales factor apportionment,” meaning that Philadelphia businesses would pay the high rate (6.45%) net income tax only on income derived from sales in Philadelphia. Single sales factor apportionment will be fully phased in by 2015 and the $100K exemption will be fully phased-in by 2016.

The legislation passed today will provide over $50 million per year of tax relief targeted toward Philadelphia-based and small businesses. By full phase-in:

• Over 30,000 of the 90,000+ current BPT filers will have no business tax liability whatsoever (i.e., $0 BPT and $0 net profits tax).
• An additional 25,000 filers will have $0 BPT liability.
• The business tax burden on micro-enterprises (those with under $100K per year in sales) will be reduced by 50%.
• The business tax burden on Philadelphia-based businesses will be reduced, in the aggregate, by 20%.

Technically Philly staffer Christopher Wink contributed to this report.