City Council approves tax credit to promote $12-an-hour minimum

City Council on Thursday approved a bill that would make it easier for fast-food firms, hotels, and other traditionally low-wage employers in Philadelphia to pay their workers $12 an hour.

If signed into law by Mayor Nutter, an employer would get a $5,000 tax credit for each new full-time worker it hires and pays at least $12 an hour. The tax break would last five years.

The bill, sponsored by Councilman W. Wilson Goode Jr. and unanimously approved, comes as some left-leaning groups are campaigning to raise the federal minimum wage to $10.10 an hour, while others want it raised to $15, as Seattle did in June.

The activist group 15 Now Philly, which has been lobbying Council to follow Seattle's example, applauded the vote.

The group "supports all efforts to increase the minimum wage, and we encourage Councilman Goode's attempt to work around wage preemptions set by Harrisburg. Raising the minimum wage will create prosperity for everyone in Philadelphia," 15 Now organizer Marty Harrison said in a statement, "and we call on City Council to go further and challenge the legal and political obstacles imposed by the state."

Nutter has until Oct. 30 to consider the bill, and mayoral spokesman Mark McDonald was noncommittal when asked about the legislation.

However, the administration's testimony on Goode's bill has been positive, and last week Nutter signed a letter urging the federal government to increase the federal minimum wage to $10.10 an hour.

The bill is an extension of a tax-credit program that has been around since 2002, to encourage businesses to stay and create more jobs. To date, 1,057 new jobs have been certified for the program, resulting in $1.8 million in tax breaks.

The bill approved Thursday is different from the 2002 program, in that the tax break lasts five years for each job created. That is significantly longer than the current program, which allows the credit for only one year.

Goode said extending the tax break to five years would make businesses more inclined to create jobs that pay more than the state and federal minimum wage of $7.25 an hour.

The tax break could be even more if the new employee is paid more than $250,000. The program allows for the tax credit to be either $5,000 or 2 percent of an employee's annual salary, whichever is higher.

The bill expands the city's $12-an-hour minimum wage that - effective Jan. 1 - applies to all city contractors and subcontractors.

City Council is going with a tax credit because it cannot force private businesses to pay the city's minimum-wage standard. Only Harrisburg has that authority.

In other action, Councilwoman Blondell Reynolds Brown introduced a bill that would tax e-cigarettes and tobacco juice, and other products.

The bill, referred to Council's Finance Committee, was immediately attacked by two lobbyist groups, the American Vaping Association and Americans for Tax Reform.