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Small steps can yield big results

Tax form 1040 with crumpled up forms, calculator, pink eraser and pencil
Tax form 1040 with crumpled up forms, calculator, pink eraser and pencil istock.comRead more

Philadelphia's tax burden is too high. We tax the wrong things. And we stink at compliance.

The typical Philadelphian already knows this, but if you need proof, we have it. We have studies from two tax commissions, in 2003 and 2009. We have research from organizations like the Greater Philadelphia Chamber of Commerce, the Center City District, and the Pew Charitable Trusts.

With a mayoral election in the offing, I hope the next mayor will be hungry to make some necessary changes to Philadelphia's tax landscape. But rather than restate this city's all-too-familiar litany - cut business taxes, eliminate the wage tax, reduce spending - I want to highlight some smaller-scale programs successfully implemented in other cities to great effect.

First, though the overall tax burden in Philadelphia is too high - dare I say this? - it doesn't make raising taxes implausible. What is implausible is trying to raise taxes that aren't clearly linked and directed to something citizens care about.

With trust in elected government at an all-time low, and having been told too many times that a certain tax would be temporary, you can understand why residents don't want to give the government any more money. Therefore, making more clear the distinction between what we wish to fund and how we fund it can help engender support when it comes time to make difficult budget decisions.

Currently, the city imposes nearly 20 types of taxes on its citizens. Proceeds from nearly all go into the general fund. Then, through the city budget process, members of Council and the mayor determine how best to allocate the money.

What we learned during the Great Recession was that most Philadelphians paid little attention to this budget process until it became evident the city might need to close libraries and recreation centers. I attended several town-hall meetings at the time. People were angry. Not just because of the situation, but because libraries and recreation centers were what remained in a declining portfolio of taxpayer-supported public amenities, and they were now threatened.

With the crisis over and tempers cooled, other funding models should be considered. For example, such public services might be best supported through a quasi-governmental structure similar to a business improvement district. For more than 20 years, property owners in Center City, as well as neighborhoods like Old City, Mount Airy, and East Passyunk have voted to raise revenue for communal projects by forming such districts - geographically constrained, self-governing, taxing authorities.

Cities in Colorado and Nevada are using a business improvement district model to fund vibrant parks and expansive recreation centers that look like Olympic training sites. To be clear, given the high tax burden, Philadelphians have every right to expect such high-quality amenities from their city government. But it has proved itself incapable of delivering. And no one predicts that will change any time soon.

To expedite neighborhood improvement, the next mayor should consider what role he or she can play in granting taxpayers greater decision-making authority over the funding and maintenance of some services. Again, the point is not to skirt city responsibility but to face reality and actually get something done for residents.

Second, Philadelphia's high tax burden falls most heavily on those good citizens who actually pay their taxes. In recent years, the city has made a greater effort to collect from tax scofflaws, but it still has a long way to go. And, frankly, some of the more than $500 million owed will have to be written off as uncollectible. We just let the problem go for too long. Lesson learned.

But we still have 20 types of taxes to collect, and the city Revenue Department must operate with outdated technology and limited staff and resources. If Philadelphia is to change its culture of nonpayment, this department will need help.

The next mayor needs to send a strong message that the city is serious about collections by investing in the human and technology capital the Revenue Department needs to do a better job. That might also mean changing the way the city does business. Consider the no-cost approach Pittsburgh adopted. The Steel City is out of the real estate tax-collection business. It outsourced that function to a third-party vendor, transferring the vendor's fee to property owners. As a result, the city has more time to focus on conducting business audits and improving compliance in other tax categories.

To be clear, I'm no fan of taxes. I'd rather pay less than more. But if I can be in control of how the money is spent, as part of a business improvement district, I might be willing to pay a little more. And, if I can trust that all are paying their share, I can hope that the mayor and Council can limit future tax increases.

Farah Jimenez is a member of the School Reform Commission, a community advocate, and a former member of the Republican State Committee