First take: Happy to plod toward tax reform

Who says Philadelphia isn't a glass-half-full kind of town?

Faced with the cold reality that long-term business-tax cuts won't happen under this mayor, business and civic leaders and many on City Council still seek to find a reason to celebrate.

Following Council's approval last week of incremental cuts in the Business Privilege Tax (BPT), Greater Philadelphia Chamber of Commerce chairman Stephen D. Steinour called it a good first step.

The tax reform group, Philadelphia Forward, headlined its press release, "WE WIN MORE TAX REFORM!!!"

"After fighting for months with no movement," Philadelphia Forward stated, "our elected officials have approved additional reductions to the job- killing Business Privilege Tax. City Council has heard the plea for more tax reform." No question, the accelerated reduction in the gross-receipts portion of the BPT over three years sends a good signal to businesses considering whether to stay or invest in Philadelphia.

It's not insignificant that this levy on revenues regardless of income - which, for startup firms, is like posting a "Keep Out" sign - is headed down. The latest cuts translate into a savings to businesses of $5 million per year.

Mayor Street says he can manage that revenue loss for the city, but he's opposed to steeper cuts based upon his pet theory that it would hamper essential city services. To believe his theory, you'd have to believe that City Hall, the national capital of pay-to-play, has sweated every last bit of waste and patronage out of its systems.

In doing so, though, he missed an opportunity to enhance the city's competitiveness in a way that, over time, as jobs were created, would boost City Hall revenues.This week, a Council majority once again bought into that false choice of pitting municipal services vs. tax reform - when Council on Thursday pushed back the start of a special tax rebate for low-wage workers.

This low-wage tax cut championed by the late Councilman David Cohen was a somewhat ad-hoc, ragged approach to tax reform. But it was truly bogus to delay it by using the "Washington Monument strategy" - "Gee, if we lose that money, we'll have to close all the parks."

The choice isn't really between higher taxes and basic services. Across-the-board wage-tax cuts are in place, with more coming. The city's property-tax abatement on new homes has helped pump up real estate transfer tax revenues. So the right mix of business tax cuts to retain and add jobs is the next smart move.

There was a better proposal before Council on the BPT. City Councilman Michael A. Nutter's plan was to lock in deeper cuts in the gross-receipts portion of the BPT through 2010, reducing the tax by about 22 percent over the five-year period.

It never was likely that Nutter would get a veto-proof majority for that proposal, yet the tax-reform coalition seems to have eroded even further. Credit three colleagues, at least - W. Wilson Goode Jr., James F. Kenney and Joan L. Krajewski - for standing with him.

Given this mayor's reluctance to cut taxes in anything other than modest increments, the issue of the city's counterproducive tax system gets plopped down in the middle of next year's mayoral election. Every candidate should be prepared to say what he favors - but, please, no "Washington Monument" copouts.