People who are self-employed could become exempt from paying a Philly business tax | City Council roundup
Also this week, Council considered measures to make water bills cheaper and to ban the city from incinerating its trash.
Philadelphia-based independent contractors and others who are self-employed could soon become exempt from paying certain business taxes as part of a measure aimed at easing tax burdens on small businesses.
City Councilmember Mike Driscoll, a Democrat who represents parts of Northeast Philadelphia, introduced legislation Thursday to carve out entrepreneurs, sole proprietorships, and businesses that have only one employee from having to pay the city’s business income and receipts tax, commonly known as BIRT.
Also on Thursday, members floated legislation to address the rising cost of water bills and introduced a bill to make it easier for restaurants to secure outdoor dining permits.
What was the meeting’s highlight?
Relief for the small(est) businesses: The bill is likely to find support in Council, where lawmakers have been searching for ways to provide relief to small businesses after earlier this year eliminating a popular tax break that allowed companies to exclude their first $100,000 in income from business taxes in Philadelphia.
That exemption effectively meant that thousands of small businesses did not have to pay the tax. However, Mayor Cherelle L. Parker’s administration in June successfully moved to eliminate the exemption, saying the city was likely to lose a court battle over the matter.
The change came after a medical device manufacturer sued the city, saying the exemption violated state law, which includes a “uniformity” clause that prohibits municipalities from creating different classes of taxpayers.
» READ MORE: What small business owners need to know about the major changes coming to Philly’s tax code
Now, thousands of businesses newly have to pay the BIRT beginning with 2025 tax bills that are due in April. If Driscoll’s measure is adopted, it would begin in the 2026 tax year, meaning that eligible business owners would see the exemption when paying taxes due in April 2027.
He said the legislation addresses concerns from small businesses that the impending tax bills will be financially unsustainable for them.
“A $50,000 business should not face a $3,200 tax hike,” Driscoll said. “That is not policy. That is displacement.”
Driscoll said that the city’s law department approved his legislation and that he is confident it does not violate the uniformity clause.
What else happened this week?
Making water more affordable: Council will consider a package of legislation to address rising water bills. Councilmember Jamie Gauthier of West Philadelphia introduced three measures:
A bill that expands eligibility for payment assistance programs to people who earn up to 300% of the federal poverty level. (This year, the FPL is $32,150 for a family of four.) There is currently a tiered assistance structure for people who earn up to 250%.
A bill requiring that the city reduce a resident’s water bill if it rose because of a water meter failure that lasted more than a year.
A resolution to hold hearings on whether lawmakers can expand assistance programs to renters. The Philadelphia Water Department does not allow bills to be in renters’ names.
A spokesperson for Gauthier said the package of legislation has 10 cosponsors — a majority of Council — making it likely to pass.
Parker opposes incineration ban: A Council committee on Monday advanced a bill to ban the city from incinerating trash, over the objections of Parker’s administration.
Currently, the city sends about two-thirds of the trash it collects to landfills and one-third to a waste-to-energy incinerator in Chester operated by Reworld, formerly known as Covanta.
Both of those contracts expire June 30, and Gauthier wants to prohibit the Parker administration from signing a new deal.
» READ MORE: Philly sends a third of its trash to a Chester incinerator. Council members took a ‘Toxic Tour’ to get a closer look.
On Monday, Chester officials pleaded with Philly to end its relationship with the facility, saying it contributes to high rates of illness.
Reworld defended its record, saying it exceeds government regulations.
Carlton Williams, who leads the Philadelphia Office of Clean and Green Initiatives, asked lawmakers to hold off approving a ban on incineration to allow the city time to study the issue.
But the committee approved the measure, sending it to the full Council for a vote as early as Dec. 4.
Dining out: Council is taking another crack at streamlining the city’s drawn-out permitting process for outdoor dining.
Councilmember Rue Landau, who represents the city at-large, said it can take more than a year and a half for restaurants to get licensed if they are not in areas around Center City and a handful of commercial corridors in other neighbors.
Beyond those locations, restaurants must get their district Council person to sponsor zoning legislation, which can take months.
Landau introduced legislation Thursday to expand the “by-right” areas where sidewalk cafes can exist without special zoning. Where the areas are expanded to will be up to district Council members.
Quote of the week
All in the family: Council members on Thursday honored boxer Danny Garcia, a North Philly native and an illustrious fighter who is retiring from the sport. He appeared in Council chambers to thank members and tell the city how much he loves it back.
Staff writers Jake Blumgart and Beatrice Forman contributed to this article.