Tax Reform Commission Committee, January 9, 2025

TAX REFORM COMMISSION COMMITTEE Room 400, City Hall Philadelphia, Pennsylvania Thursday, January 9, 2025 5:00 p.m. PRESENT: MATTHEW STITT, CO-CHAIR RICHARD VAGUE, CO-CHAIR FORMER COUNCILMEMBER ALLAN DOMB (Virtual) FORMER COUNCILMEMBER DEREK GREEN FORMER COUNCILMEMBER DANIEL McELHATTON KHINE ARTHUR VICTOR GARRIDO (Virtual) JOVAN GOLDSTEIN JENNIFER KARPCHUK (Virtual) PAUL LEVY FOLASADE OLANIPEKUN-LEWIS (Virtual) GREG SEGALL JERRY SWEENEY ZACH WILCHA - - -

Good evening. Thank you all for joining us today for the Philadelphia Tax Reform Commission public hearing. The Commission's work and the resulting report are still in progress, and we are conducting this hearing today to gather additional public input before finalizing our recommendations. During the spring of 2024, City Council overwhelmingly approved Resolution No. 240108, sponsored by President Johnson, to reconvene the Philadelphia Tax Reform Commission. The Commission is tasked with conducting an updated comprehensive analysis of all taxes imposed in Philadelphia, including by the Commonwealth of Pennsylvania, and to make recommendations concerning tax reforms. The Commission consists of members, four members each are appointed by Philadelphia Mayor Cherelle Parker and Council President, one member appointed by City Controller Christy Brady, and remaining members one each are selected by various local Chambers of Commerce in Philadelphia. We want to acknowledge and thank the Tax Reform Commissioners for being here today and note for the record that we have a quorum present. We also want to acknowledge and thank the members of the Tax Reform Advisory Committee that are here with us today whose members are appointed by various community organizations, ensuring a broad representation of Philadelphia's diverse community interests. The group is tasked with offering an additional viewpoint to the 15 Commissioners. We are here today to hear public testimony regarding how changes to the tax code could better support equitable and inclusive economic growth and stability in Philadelphia. To ensure that there is opportunity for all who are present to testify to be heard, certain ground rules have been established as follows: Number one, your testimony should pertain to the taxes imposed in Philadelphia. Number two, once your name is called, you will have up to three minutes to speak. Again, to be fair to all those who wish to speak, we will hold firm to that time. Number three, once your allotted time has passed you will be asked to conclude your remark. Also for today's hearing, we will begin by listening to testimony from individuals who are joining us virtually. This virtual option was created to provide another avenue for the public to participate in the process. And I want to just add a couple of personal comments. I have been very, very grateful to everyone involved in this. I think it's a very special time in Philadelphia. I think we have an extraordinary Mayor, an extraordinary City Council President, an extraordinary City Council. I think things are aligned for great things to happen in Philadelphia and I think over this past year lots of great things have been happening, so I'm really proud to be a small part of this and I'm really thankful to the people in this room and the people throughout Philadelphia for all their wonderful support of our efforts. That being said, let me turn it over to my colleague Stefan Johnson to take us through the various folks that will be testifying today.

Thank you, Richard. I certainly echo the meaningful sentiments you just shared. As Richard just stated, we will begin with our first panel Jeff Brown and Michael Howells. Please state your name for the record and proceed with your testimony. And again, they will be providing testimony virtually.

Hi. Good afternoon, everyone. Hope you all can hear me okay. My name is Mike Howells. I'm here representing the Pennsylvania Food Merchants Association along with one of our Association members operating in the city, Jeff Brown. Thank you for holding this hearing and for the opportunity to participate. PFMA has advocated for the food and beverage industry across the Commonwealth since 1952. Today the Association represents more than 600 members and 3,000 retail food stores that collectively employ more than 300,000 Pennsylvanians in Philadelphia. PFMA members represent more than 140 grocery stores, convenience stores and other businesses in the food supply chain, employing thousands of City residents and serving millions of customers each year. The Association appreciated the opportunity to provide comments this past year before the Commission on the impact of the Philadelphia beverage tax in the city. At that time, we pointed out the beverage tax led to an almost 47 percent decrease in beverage sales within Philadelphia following its implementation and as a regressive tax unfairly impacted lower-income communities whose residents could not easily travel to the suburbs to avoid the tax, unlike their wealthier counterparts who we know do. It doesn't take a leap of logic to envision how consumers with the means to travel outside city limits to make their beverage purchases would simply do their broader grocery shopping at the same time, and we in the industry have seen it happening essentially in realtime. In short, the tax not only reduces revenue on those specific items subject to it but also contributes to a broader decline in foot traffic, adversely impacting other sales and ultimately the ability of stores to remain open. Ultimately, this worsens food accessibility in areas that are already underserved. Food retail is a large employer in the city and the decrease in merchandise margin in city stores and their corresponding decline in customer account has impacted staffing levels and hours. Less business means reduced hours for employees and correspondingly less income for those workers. Aggregated data from PFMA members shows a measurable decline in hours for City employees compared to collar county employees following the implementation of the tax in 2017, even as pay rate went up. We understand the stated goals of the beverage tax and what it was intended to accomplish. However, we think it's critical to understand that there have been costs as well, and it's imperative that we work together to address them. Transparently, we believe the most effective way to rectify these issues may be to repeal the beverage tax. However, we understand that a more practical request would be a thorough reassessment and a reduction of the tax to support economic recovery and promote equity within the city. This reassessment could also play a pivotal role in exploring less regressive revenue mechanisms that do not disproportionately impact specific sectors or demographics. PFMA and our members believe in a tax system that fosters economic growth and community well-being. We urge the Commission to consider the implications of the beverage tax and the burden it places on both businesses and City residents. We want to collaborate with you towards solutions that support a thriving, equitable Philadelphia. Thank you members of the Commission again for this hearing and your attention to these critical issues. I would pass it over now to Jeff Brown. Thank you.

Good evening. I'm Jeff Brown and I appreciate the work that's being done on this issue. I think it's important and the volunteers who volunteer their time. We have 16 stores in and around the city, and a lot of the work in my career, 37-year career, has centered around Philadelphia and especially the less-privileged communities of Philadelphia, which sometimes are referred to as food deserts because it's very hard to operate a full service grocery store in those stores. On top of that, I'm a unionized employer and we pay better wages and benefits, more life-sustaining benefits with pension and retirement, health insurance, so on and so forth, so our costs are higher so the two goals are tough to balance. The fact is when the beverage tax was implemented -- and just to give you a framework for what it is, probably one of our most popular beverage items is a 2-liter beverage. Two liters is almost 67 ounces at $0.01 and a half an ounce, it's $1.01 a bottle. For those who don't shop in a grocery store regularly back at the time it was implemented, we would often put these items on sale for $1. And so, it doubled our price. And what I learned is the grocery stores that in some cases were across the street but in the collar counties, they still had it for $1 and I had it for $2. And going through that, we found a very, very tremendous impact on stores close to the collar counties. One of those stores were at 67th and Haverford and that store lost 30 percent of its revenue and was forced to close due to losing money. To help the neighbors, I gave the store to another grocery operator who operated it for a year and then it closed, and that store is a dollar store today. So if you look at that one example, we got the exact opposite thing we wanted. Instead of a unionized family-owned, full- service grocery store, we ended up with a dollar store, which I don't think many of us think that that was a good thing. And I think that's what this tax does. Of the stores I 6 operate, there's an additional two 7 stores that struggle also in food 8 deserts. And I'm concerned when 9 their leases expire what I'm going 10 to do, and they would affect two 11 additional food deserts. And it's 12 also affected my mentality. 13 I was primarily 14 dedicated to eradicating food 15 deserts, but I know that I can't do 16 that with this tax and I think my entire industry knows that so all of the operators that used to do this work, none of them are doing this work. And in my own case I've been focused on higher-income communities because I know I can still make that work, even though I want to be doing the food desert work. Anyway the tax is a problem beyond that. When the tax was sold to us, it was to pay for primarily Rebuild and to pay for PreK. Today under the current administration there is no Rebuild. And so, the majority of the tax revenue that was going to rebuild there is no Rebuild. And so, we are not using the majority of the revenue for its intended purpose. On the PreK side, prior to the beverage tax the majority of PreK slots that we're talking about were paid for by the state, but they require the individuals to be low income and we're universal. So when you look at what we actually added, we actually added some slots for moderate or middle-income people. And when you look at what is the cost of that, it's not a great deal of money so this was a smart political idea but it wasn't a good economic idea for our city or for our citizens. And I think it is time to repeal this tax, especially considering the inflationary environment we're in. Our customers are really struggling and we have a threat, a four-year threat of what the current federal administration will do and how it might impact the poor. And Philadelphia being one of the biggest poor cities in the country, I think it's incumbent upon us to see where we can help the poor get through the next four years. That's basically my comment.

Thank you. Thank you, Jeff, and thank you, Michael, for your testimony. Are there any questions for these witnesses from the Commission? (No response.)

Okay. Hearing none, the next people to testify are Sue Jacobson and Stan Shapiro. Please state your name for the record and proceed with your testimony.

Susan Jacobson. So good evening, members of the Tax Reform Commission and thank you for the opportunity to address all of you today. I'm past Chair of the Chamber of Commerce for Greater Philadelphia. And as most of you know, we're an organization that represents over 1500 businesses and there's 600,000 employees collectively. I actually founded my company and built my company 15 years ago right here in Philadelphia. And so, I'm here because Philadelphia is at a pivotal moment in its history. Our city faces economic challenges that demand immediate and transformative action. And as the Mayor has repeatedly emphasized, we must be bold in our approach to addressing these issues. This is really, as we know, not the time for half measures, incremental adjustments or quite frankly kicking the can down the road. It's our time to reimagine how our city operates and how we position Philadelphia as a beacon of opportunity and growth. Philadelphia, we know this, they're losing businesses at an alarming rate and they're struggling to attract new ones. The private sector job growth that is critical to our city's vitality, it's falling far behind regional competitors, high tax burdens and an uncompetitive economic environment. What's happened is it's left us at a disadvantage. I'm not telling any of you anything that's new, but this is a wake-up call right now. If we don't take this opportunity to act decisively, we risk further stagnation and decline. The current wage tax structure, it penalizes Philadelphians. It takes money out of their pockets and it discourages residents and businesses from investing in our city. Wage taxes have become a barrier to growth and prosperity. They limit opportunities for the people and the communities they are meant to serve. So by addressing this we can provide Philadelphians with the raise that they so desperately need and undoubtedly deserve. So, look, the stakes have never been higher. We all believe this, and the decisions that you all make today will determine the trajectory of our city for decades to come. You have this really great opportunity -- one that we cannot afford to lose -- to implement bold reforms that will redefine Philadelphia as a hub of growth, innovation and inclusivity. And as the Mayor has rightly stated, bold action is essential and this Commission has the unique opportunity to chart a new course for our city. Delaying action or settling for minuscule adjustments on the wage tax that will not make a dent in the livelihood of those we are trying to impact will only exacerbate the challenges that we face. The current state of our city characterized by job loss, population decline and economic stagnation, it demands urgent, transformative measures. This --

Thank you, Susan.

-- is not just a policy decision. It's --

Thank you --

-- a moral duty. So thank --

Thank you for your testimony, Susan.

-- you everybody and thank you for allowing me to speak to you today.

Absolutely. Thank you for your testimony. And in the interest of getting to everyone who would like to provide comments, we're going to adhere to our three-minute limit. And with that, we're going to move to Stan Shapiro. Stan, please state your name for the record and proceed with your testimony.

Thank you. My name is Stan Shapiro and I'm here today as Vice-chair of Philly Neighborhood Networks. Previously I served as counsel to City Council for many years leaving that post in 2002. It is now six months since my previous testimony and I think it's important as the Commission gets closer to issuing its report to reemphasize some of the points I made then about the Commission's legal obligations under the Home Rule Charter. The relevant portions of the key Charter provision relating to the Commission's duties read as follows: "The Commission shall analyze each tax to determine whether and to what extent the rate of the tax may be decreased in a fiscally and socially responsible manner. The Commission's work shall also be guided by the principle of tax fairness and tax equity in apportioning tax burdens." Simply put, any recommendation that the net earnings portion of the Business Income and Receipts Tax be cut by any across-the-board amount violates this mandate. Such a cut by its very nature benefits businesses more, the richer they are. For instance, a company with $1 million in net earnings would receive at least 10 times the benefit from an across-the-board cut than a company with $100,000 in earnings, probably much more than that given the $100,000 receipt exemption that's now on the books. A company with $10 million in earnings would receive at least 100 times, 100 times the benefit of the $100,000 company, if not more. It is simply impossible to interpret the English language in a way that would suggest such cuts satisfy the Charter's standard of tax fairness and tax equity in distributing tax burdens. We are told that the Commission must look past that inconvenient truth because across- the-board cuts are essential for economic growth that will lift all boats, including those of the poor. But truth be told, big companies in Philly have encountered enormous profit growth over the past five years and their overall tax burden has substantially declined from a combination of state and federal corporate tax cuts. They are about to get another round of tax cuts at the federal level. These businesses pick their locations based upon many things other than tax rates including, but not limited to, access to markets, an educated workforce, robust public transportation, affordable financing, strategic location, affordable housing and a vibrant urban lifestyle. Some of these things are already features of our city, but many of them require more funding, not less. Strengthening community cohesion and reducing violence is also a necessity for our neighborhood small businesses and that also comes with a price tag, which will become more unaffordable if we give all this money away to big business. Given the --

Thank you, Stan, for your testimony. Thank you, Stan, for your testimony. Really do appreciate it.

I'm almost finished.

Are there any questions for these witnesses from the Commissioners? (No response.)

Okay. Hearing none, we thank all of you who joined us virtually for your testimony. And with that, we'll move to the inperson portion of the hearing. Okay. The next two people to testify are Reverend Greg Holston and Courtney Richardson. (Witnesses approached Witness table.)

Reverend Holston, I know that you mentioned earlier that you really needed to leave and as Richard mentioned earlier, as I said earlier, we're trying to make this as open to everyone as possible. So please state your name for the record and proceed with your testimony.

Thank you. My name is Reverend Gregory Holston. I am on the Tax Advisory Committee for the Tax Reform Commission and representing the NAACP as their appointment for the Advisory Committee. Thank you everybody, and I really have enjoyed and learned a lot over the last six months talking to all of you around tax reform. I continue to hear competing stories about where Philadelphia is. Some are saying we're some kind of job basket case and we're losing jobs by the tens of thousands. But over the last 19 years we've actually gained jobs. 20 And I've learned that we have a growth rate that is expected in the terms of our budget, an expectation that we're going to receive more revenue than we've received before, that from the Pennsylvania Policy Center they described that if we just stayed at this pace and we had just the same expenditures we have right now, we would over the next years create about 200,000 jobs, 7 so we are creating jobs. We are 8 prospering as a city. 9 The question becomes 10 that in a city that is really wealthy but also as poor as any big city in the country, the reality becomes the difference -- for making a difference in our city is really the issue of inequality, that we have to share the wealth that we're all producing in this city in a greater and deeper way way. When we did the tax -- and I'll try to be quick. Again, when we did the study and we decided that we could tax cut, make an across-the-board tax cut and not give up or reduce services, I really was poignant on that one, because the bottom line is we don't have enough services in this city now. We have a lot of really major issues. Gun violence in this city at one time was 563 homicides just in 2021. It is now at a record low or one of the lowest over the last 60 years, around 250. That happened because we actually spent more money. We provided more services. People had more trauma services. People had more support and help. When we provide more services, we create the atmosphere for better businesses to come and we know that's one of the reasons that businesses don't come to the city, not because of the BIRT tax but because it's violent and they can't get their workers to even want to come into Center City. When we create a safe city by spending money, services, we provide a better business environment. And so, I know we only have three minutes and I wanted to share that. But I think there are some appropriate tax cuts that we can talk about, real talk about exemption, the BIRT exemption being raised to as incentives for small businesses. We know now that 75 percent of those businesses already don't pay the BIRT, but we can do more. We can do things directly for African American business. We can use some of these dollars instead of a tax cut and set up the kind of venture capital funds and access the capital that they desperately need. We can be so targeted in what we do that we can make real transformational change but not spend the same amount of money that goes to rich companies that can be able to make the sacrifice. And finally, my last point is we can really talk about -- go to people in this city and say, if you could do a type of project that would lift up the boats of Black and Brown businesses in this city and pay an extra tax, a wealth tax that you knew was directly going to go to transform those businesses, those neighborhoods that have 38 percent poverty rates, 45 percent poverty rates -- I passed a neighborhood that had 50 percent poverty rate. In those neighborhoods that could make a transformational change, would you be a part and would you want to do that, and I'm believing they love Philadelphia enough that they would actually do that. We need to ask them. Don't be afraid of even asking for a tax increase when it's targeted to people that can make real change in our community. Thank you so much.

Thank you for your testimony. Ms. Richardson, please state your name and proceed with your testimony.

Thank you and good evening. My name is Courtney Richardson. I serve as the Executive Director and chief counsel for Pennsylvania House Appropriations Committee. I am here on behalf of State Representative Jordan A. Harris, the Majority Appropriations Chairman of the Pennsylvania House of Representatives representing South and Southwest Philadelphia. The testimony that we were requested to provide is about the increase of the $15 minimum wage, increasing the minimum wage to $15. In 1938 the United States made a significant step toward instituting a federal minimum wage under the Fair Labor Standards Act. On January 17, 1968 the Pennsylvania General Assembly enacted the Minimum Wage Act, establishing a fixed minimum wage and overtime rate for employees in Pennsylvania. Initially set at $2.65, the minimum wage has been increased seven times over the past 57 years with the last increase of $7.15 taking effect on July 1, 2007. In 2009, the federal minimum wage was increased to $7.25 which also applied to Philadel -- Pennsylvania. On June 20, 2023, the Pennsylvania House passed House Bill 1500 sponsored by Representative Jason Dawkins of Philadelphia, the Majority Chairman of the Labor Committee. House Bill 1500 proposed a phase increase in the state's minimum wage to $15, beginning with $11 on January 1, 2024; $13 to January 1, 2025; and $15 to January 1, 2026. The tip minimum wage would also rise to 60 percent of the state's minimum wage. Starting January 1, 2027, the minimum wage will be adjusted annually based on the cost of living using the Consumer Price Index or the CPI for the Pennsylvania, New Jersey, Delaware and Maryland areas. However, this bill did not make it into law because it did not move forward in the Senate. As Majority Chairman of the House Appropriations Committee Chairman Jordan Harris states that it is now the time to fight for living wage across the Commonwealth, which would directly affect Philadelphia workers. Inflation is significantly increased and diminished the purchasing power of the minimum wage. According to the U.S. Bureau of Labor Statistics the CPI inflation calculator, $7.25 in 2009 is equivalent to $4.85 in today's dollars. With the average rent in Pennsylvania and Philadelphia at $1,500, the minimum wage earners cannot afford housing. A $15 minimum wage would directly benefit approximately 776,000 Pennsylvania workers and indirectly benefit an additional 568,000 workers with a positive impact of a million workers, specifically focusing on those in Philadelphia. Over 21 percent of Pennsylvania's workforce would see wage increases adding an estimated billion wages to the state's economy. In conclusion, increasing the minimum wage would raise worker incomes and result in a higher personal income tax, which would also be an increase to the City's wage tax and also increase the City's sales and use tax and the Pennsylvania sales and use tax. The House Committee on Appropriations estimates that a $15 minimum wage would generate approximately $104 million in revenue which continue to increase in future years due to the CPI. Thank you.

Thank you. Thank you for your testimony. Are there any questions for this witness? (No response.)

Okay. Hearing none, the next people to testify are Dan Fitzpatrick and Joe Cacchione. (Witnesses approached Witness table.)

Thank you and good afternoon --

Good afternoon.

-- Chairman Vague and the rest of the members of the Tax Commission. Thank you for having us today. My name is Dr. Joseph Cacchione, CEO of Jefferson and Chair of the Policy Committee for the Greater Philadelphia Chamber of Commerce, and I'm pleased to be here today to provide testimony on the potential reforms that you're proposing. This Commission has had an opportunity to propose significant improvements in Philadelphia's tax structure to drive the opportunity for our residents, our commuters and the businesses across Philadelphia. The Chamber's vision for our Greater Philadelphia region is to be a top global destination for business and leader and a leader in inclusive growth, and the Chamber remains committed to partnering with key stakeholders, city leadership and advance the policies to ensure economic opportunity and competitiveness. To help ensure we achieve these goals, Philadelphia must reform its tax structure to compete for businesses, business growth, attract, retain and grow top talent that our businesses need. Our current tax structure hinders our ability to be successful in many of these areas and it's our request that you consider several significant changes to allow us to better compete: As a CEO of one of Philadelphia's largest employers, the City's wage tax negatively impacts our ability to recruit, attract, retain and grow talent here in Philadelphia. Our wage tax puts us at a competitive disadvantage when compared to similar cities here in Pennsylvania, like Pittsburgh especially in the comparison with surrounding suburbs with no or significant lower-earned income taxes. High wage taxes penalize residents, reduces discretionary income, limits spending power and slows economic growth. Wage taxes also disproportionately impact low- and middle-income workers creating barriers to upward mobility and widening economic disparities. They discourage businesses from hiring locally, opting instead to grow in areas where there are lower tax burdens, further reducing jobs in our Philadelphia area. The Chamber's proposal which will be presented later in greater detail is a bold essential step fostering economic growth, reducing barriers for businesses and enhancing Philadelphia's competitiveness. These reforms represent a pathway to balance municipal services with sustainable, inclusive and economic growth. Collaboration among City leaders, businesses, community stakeholders is essential to secure Philadelphia's future as a thriving, equitable and competitive city. I thank you for your time to allow us to testify today and I'll turn it over to my colleague Dan Fitzpatrick.

Thank you, Joe, and thank you to the Commission for the opportunity to present. I'm Dan Fitzpatrick. I'm the President for Citizens for the Mid-Atlantic and Midwest regions. I'm the past Chair of the Greater Philadelphia Chamber of Commerce and a Vice-chair along with Joe on the Public Policy Committee of the Chamber and also have the privilege of serving as one of the chairs on Mayor Parker's Business Roundtables and it is the Equitable Investment and Entrepreneurship Committee. And there the issue of the BIRT tax, reductions that are discussed are very helpful because that's where we're trying to get minority entrepreneurship, reducing the BIRT tax there and also increasing the exemption is very helpful to get businesses started, really important that we do that. But personally, I live and work in the city of Philadelphia, native of Philadelphia. I'm really bullish on Philadelphia and I think that's the opportunity that I think Mayor Parker and City Council has really put forward is let's be bold because the reality is that the wage tax is a challenge for us, right. And I think where we are is Philadelphia is doing reasonably well. But if you analyze what reasonably well is, it's falling behind other major comparable metros so that's the issue here. What if we actually had tax policies that encourage pro-growth of job creation, of job retention, job growth and also population growth. This situation we have now, right, we know we're not just losing jobs but we're losing population. And at that point when we want to have this great inclusive diverse economy and when people begin to do well is when they start to leave as the wage tax really kicks in. We all know from a personal perspective seeing literally the number of individuals who leave the city over the tax issue but then also the number of companies. I happen to represent well over 1,000 companies in the region and know why they set up in whether it's Montgomery County or Delaware County or South Jersey versus Philadelphia. So again, this is a real opportunity. I think the opportunity really is to take -- we are doing better than we usually assume we are as Philadelphians. We take that really bullish optimistic view and let's get that into some of our economic assumptions and really take these steps to really drive our economy forward and really reach the potential that we can. And I guess both on a personal and professional level obviously we look at Boston, right. And the growth, the economic vitality of Boston, the job growth, the success of that city economically there is no wage tax, right. So that's the challenge we face in the opportunity. I really look forward to what Will Carter is going to testify on behalf of the Chamber as far as the real details of why this does make sense economically for our city. Thank you.

Thank you for your testimony.

Thank you.

Are there any questions for either one of these witnesses? (No response.)

Okay. Hearing none, thank you. The next people to testify are Will Carter and Regina Hairston. (Witnesses approached Witness table.)

Good evening.

Good evening, good afternoon, members of the Committee, Chairman Vague, Chairman Stitt and my Chairman, Mr. Goldstein. It is a pleasure to be before you today. My name is Regina A. Hairston, President and CEO of the African American Chamber of Commerce for Pennsylvania, New Jersey and Delaware. Thank you for the opportunity to testify. Philadelphia's dual taxation structure under the BIRT tax and gross receipts, the net income is a barrier to economic vitality, particularly for Black- owned businesses, small businesses. Often we hear from other folks that testify that the BIRT does not impact small Black businesses or diverse businesses, and I'm here to say that it does. I am a quarter of the Diverse Chambers Coalition for Philadelphia, which is made up of the Diverse Chambers. We issue a survey each year, which we have done for the last four years, and that is a top issue, the top three issues, the BIRT tax. So this is coming directly from the business owners themselves. And why is this important? Because not being able to reinvest in the companies, it stunts the growth of small businesses. We know that Black businesses are disproportionately sole proprietors. And when we hear the word sole proprietors, it does not mean that they're all making under $100,000. That's not the issue. So they make a scale from the $100,000 to the million dollars as well. It's about having predictability and sustainability so that they can hire employees. We know that if Black businesses were on par with other businesses that we could see an increase in the country of 600,000 new jobs and we would see that same trend in Philadelphia. We know that the communities in Philadelphia while we hear the tale of two cities, they're impoverished. What helps poverty? Good, sustainable, wage-paying jobs. And we know that the reduction of the BIRT tax for our small businesses will help them grow, so thank you for the opportunity.

Thank you.

Good evening. William Carter, Vice- president of Local Government Affairs for the Greater Philadelphia Chamber of Commerce. It's great to be back in these halls. Many of you all know I was last Chief Operating Officer here in City Council. And so, feels really comfortable to be here. Over the past several years, the Chamber has collaborated not only with the Diverse Chambers but reputable think tanks like Econsult, and I am joined by Ethan Connor-Ross here of Econsult who will go over some numbers in a second. And we're looking at a bold, bold proposal to spur local job growth and business growth throughout the city by lowering the City's wage and BIRT taxes. Our city's challenges are well- documented. Poverty, education, shortfalls, blight, gun violence and global economic force is making it harder for people to make ends meet. These are all complex issues with proposed solutions from across the ideological spectrum. However, it seems that everyone from heads of households to heads of companies agree that increasing the number of people working at good-paying jobs or running successful businesses helps with each of these issues. Currently to do so we have to as a city improve in two key areas: More good-paying jobs and business opportunities and more citizens prepared to take advantage of those opportunities. It's well-documented and you all have a PowerPoint in front of you that I passed out as well documenting that the city has one of the highest poverty rates among U.S. cities and the second highest unemployment rate among peer metropolitan areas. Philadelphia also faces critical economic crossroads having experienced a percent decline in 13 jobs since 1970 while regional 14 competitors like Boston, 15 Washington, D.C. and New York have 16 seen double-digit increases. A 17 large part of this is because 18 Philadelphia has fewer private 19 employers of all demographics than 20 comparable locales. And you can 21 see that in the document that we have here on . Many of Philadelphia's largest employers are government or nonprofit organizations rather than private for-profit businesses. This lack of private employers correlates with low business density, reduced startup activity and more residents leaving our city for better opportunities. As a matter of fact, according to Pew Charitable Trust approximately 60,000 residents leave the city of Philadelphia annually with at least 10,000 more departing, coming in than departing -- departing more than moving in I should say, often citing limited job opportunities as a primary reason. You may ask why we have low business density. Well, it's really simple. Heads of companies make similar decisions as heads of households and reasonably locate where they and their employees can pay lower costs and operate more easily. So it makes sense that critical to retaining and growing and attracting more businesses and thereby creating more-good paying jobs is lowering the City's highest in the nation wage tax and the double tax from the BIRT or Business Income and Receipts Tax. As evidenced by the combined tax rate charts in the document, the City and state local personal income tax for Philadelphia is higher than cities like Pittsburgh, Chicago and Atlanta and further, that the City's combined corporate income tax rate of 14.30 percent significantly exceeds that of comparable cities, including Chicago, Boston and Washington, D.C. I'm going to bring up Ethan now at this point. The Chamber is pushing for what we say bold reform now. We're pushing for elimination of the BIRT, net income portion of the BIRT in five years and proposing that the wage tax be reduced to below 3 percent in 10 years. And we know this is doable based on a number of factors, including better-than- expected revenue projections or better-than-projected revenue receipts I should say and fund balances over the past 12 years as well as a better-than-expected growth rate. At this time, I'm going to have Ethan come up.

Yeah. Well, I do want to point out that we are out of time and I also want to point out that we have a public comment portion, Ethan and Steve, and that you'd be welcome to speak during that portion. But at this time we'd like to move on to the additional panelists. Thank you for your testimony. Are there any questions for these panelists at all? (No response.)

Okay. Hearing none, thank you for your testimony. Okay. The next two individuals we have are Devi Ramkissoon and Jigar Mehta. (Witnesses approached Witness table.)

Good evening.

Good evening.

Good evening.

Please state your name for the record and proceed with your testimony.

My name is Devi Ramkissoon. I'm here representing the Sustainable Business Network of Greater Philadelphia. Good evening, esteemed members of the Tax Reform Commission. Thank you for the opportunity to address the Commission today. As I mentioned, my name is Devi Ramkissoon and I'm the Executive Director of the Sustainable Business Network of Greater Philadelphia also known SBN. SBN is a nonprofit membership organization serving locally-owned values-driven businesses. Our mission is to build a just, green and thriving local economy across the Greater Philadelphia region. For over two decades, SBN has worked to cultivate an economy that is environmentally responsible and socially and economically equitable. I understand that the Commission is considering innovative tax solutions for the city of Philadelphia. Today I am here to encourage you to add the sustainable business tax credit to your list of solutions. It provides crucial support for businesses committed to advancing environmental and social sustainability within Philadelphia and meeting the city's clean and green goals. The sustainable business tax credit has historically played a key role in promoting a vibrant and resilient local economy. Philadelphia led the way as the first city in the nation to introduce this credit back in 2009, setting a precedent that demonstrated the city's commitment to supporting businesses within a triple bottom line approach. While the sustainable business tax credit ended in Fiscal Year 2022, we were encouraged to see Councilmember Jamie Gauthier introduce the bill to reinstate it on October 10, 2024. While we await the date of the hearing to review the tax credit, I encourage the members of the Commission to add it to your list of recommendations. The sustainable business tax credit is an investment in Philadelphia's local economy and diverse workforce. Research shows that businesses that prioritize social and environmental outcomes in their operations are three times more likely to be owned by women and are more likely to offer employee ownership, health care and retirement plans. Data also consistently illustrates that these businesses outperform their peers by fostering stronger customer loyalty, reducing waste and building more efficient future-ready operations. These businesses also reinvest in their communities by hiring locally, paying living wages and supporting community programs and charitable causes. Sustainable businesses are a powerful economic tool to advance Philadelphia's clean and green agenda and drive long-term economic growth. The economic, social and environmental benefits of the sustainable businesses are not just hypothetical. They're well-documented making this tax credit a wise investment for Philadelphia. In closing, I urge the Commission to add the sustainable business tax credit to your list of innovative tax solutions for Philadelphia's businesses. This credit is not only a recognition of the business community's potential to drive positive change but a powerful tool for attracting and retaining forward-thinking businesses, bolstering economic growth and making Philadelphia a cleaner, greener and safer city with economic opportunity for all. Thank you for allowing me to speak today.

Thank you.

My name is Jigar Mehta. I'm here representing the Asian American Chamber of Greater Philadelphia. Actually I'm here representing a business in Kensington. Kensington needs help today. The specific business is the Medicine Shop and a good friend of mine, Mesh Patel. What we're looking for is an AMI-adjusted BIRT tax credit. The goal is specific to target wards that have a lower AMI. The particular adjustments would be wards with lower AMI would receive a higher tax credit cap. Also, wards with a lower AMI will receive a higher credit value. The goal will be specifically set up so that a ward with less than $30,000 in AMI would be able to get $100 million tax credit allocated towards that. The credit value for that specific BIRT liability would be up to 95 percent. Then we're saying another ward that potentially has an AMI of $70,000 would get a tax credit as well but for $25 million, and we would apply a credit value up to 50 percent of that. The key reasons for that is because cash is king. The biggest challenge these businesses have is that their money, they don't know where the BIRT tax is going and they need help. That cash flow has to stay in Kensington. This BIRT tax credit would help them invest in their own communities, creating jobs, affordable housing, education and training, community development and procurement for their local businesses. We know that there are economic multiplier of effects when small businesses invest in their own communities. For example, for every $10,000 invested in their own small communities, that is 20,000 in economic activity. That in itself can equate to about a 40 percent wage improvement in that local community. So what we're asking for is that we have this AMI focused in the specific wards that are being challenged right now, tax credits targeting economic development, community revitalization, business participation and fiscal responsibility again focusing tax credits in the wards that need them today. Thank you very much. Appreciate the opportunity to speak to this council. Thank you.

That's very helpful and greatly appreciated. Thank you.

Chairman, I have a question. Mr. Mehta, do you have a written testimony of what you just presented regarding AMI?

I have a document. I've not submitted that testimony, but I can --

If you could -- because I was listening to your information about AMI. I'm curious to get some more information. If you could maybe circulate that to Mr. Johnson and he can circulate it to all the Commissioners because I would like to --

I'd love that, sir. Thank you very much.

And as you were talking, I'd like to bring Will Carter back up because I had a question in reference to his presentation.

I would echo that. Thank you very much. Derek, I would echo that. But I would also say to everyone who has testified, some folks submitted something in writing in advance. If you did not, we would love to get it in writing now so you can send it to Stefan or any of us and we'll make sure all the Commissioners get it and what have you. But that's very helpful, Derek. Thank you.

We'll do that. Should I give it now or later?

Mr. Johnson, if you could provide maybe your email address.

Yeah. If you could connect with my colleague. I'm going to have Christina --

I'll do that.

On the side.

Thank you very much.

If anyone else has any testimony that they haven't submitted to us already, you can connect with my colleague Christina who's sitting over here on the side. Just connect with her afterwards. Thank you.

Councilman Green, I appreciate the alumni look.

No, I was looking through the information that you provided earlier and I noticed -- I want to make sure my understanding is that you're suggesting, the Chamber's suggesting the elimination of net income proportion of BIRT over five years and the reduction of the wage tax to 3 percent over 10 years?

Yes, and this is based off some assumptions that we had Econsult put together. And I'd like to give them an opportunity. We saw it was already stated that -- we will get that opportunity now.

And the reason why I wanted to bring you back up as well as Ethan because in your presentation you gave information about a reduction schedule and you also provided information regarding revenues and fund balance, but I didn't see a cost perspective on the reduction. Is it front-loaded, is it backloaded? And I was curious in reference to both the net income portion of BIRT versus wage what you were thinking in that regard. And if Ethan can provide that information, that would be helpful.

Yeah. Ethan.

Yeah, I'm happy to speak to that. And just for the record, my name is Ethan Connor-Ross. I'm a principal with Econsult Solutions. To answer your question directly, and then I can get into some of the additional specifics. The tax cuts or the rate reductions are linear. So the rate reductions are the same year-by-year, so it's not front-loaded in or backloaded in that sense. But we do have estimates of the revenue effects of the rate reductions and then different scenarios of possible growth from job growth, and we can provide more detail than what's in these slides as well.

So you're saying a linear reduction over the five years same amount each year for both net income and BIRT and also for wage over 10 years?

The wage is spread over 10 years, but in both cases same rate reductions each year, yes, same percentage reductions.

And do you have information that correlates that to job growth?

Well, let me speak a little to the remarks I was going to give here and hopefully that'll answer the question. So the Chamber put forward this and tax reform 4 proposal that we'll describe and 5 the schedule of rate reductions 6 eliminates the net income portion 7 of the BIRT in 5 years and reduces 8 the resident ad non-resident wage 9 tax below 3 percent in 10 years. 10 And Econsult has been asked to look at the potential revenue impacts of these rates under different job growth scenarios. So based on BLS data, the annual rate of job growth in Philadelphia over the past 12 fiscal years has been 1.5 percent, and that includes both the dip and recovery from COVID. And the job base has increased every year during this past 12-year period except for 2020 with the onset of the pandemic. Job growth has actually been above percent in each of the last two fiscal years and the City's future job growth trajectory depends on a lot of things, but among them is the policy decisions on tax competitiveness. Each 1 percent increase in annual job growth translates to about 500 million in additional wage tax collections over the course of the five-year plan from expansion of the tax base. So a 3 percent annual job growth at the tax rates in the 5 and 10 plan would produce actually more tax revenue than those forecast in the City's five- year plan which projects no net job growth over those five years. Econsult has also taken a look at historic data from the City on annual revenues and fund balances. Over the past 12 years the actual revenues realized by the City at the end of the fiscal year have exceeded the adopted budget 3 times with again the only exception coming during the pandemic. In addition, the City's in the strongest position in decades with respect to the fund balance, which has been more than 900 million at the conclusion of each of the past two fiscal years. So these factors indicate to us that the City has fiscal room to make progress on tax competitiveness. And just in conclusion, multiple tax commissions over multiple decades have identified tax competitiveness as a barrier to Philadelphia's economic growth. And recent trends in the City's current fiscal position indicate there's no better time than the present to make this investment.

So based on what you're suggesting, you're saying the City of Philadelphia has had 1.5 percent growth per year over the past years? 5

6 Correct, that's the average. 7

Okay. And 8 so, based on your linear reduction 9 for the net income portion of BIRT 10 over 5 years and over 10 years to 3 11 percent for the wage tax, how does 12 that impact the fund balance and service cuts?

Sure --

Well, let me rephrase. How does it impact the fund balance and does your proposal have any impact on other reductions?

We did not make any assumptions about City expenditures. We were focused on the revenue side and whether at different growth rates revenue could exceed the five-year plan even with those reductions and rates. So at about a 3 percent rate, it is in excess of the revenues. At a 1.5 percent rate at the average, it's a little bit below the revenues in the existing five-year plan. So we can provide more specifics on those numbers.

Last question, I am a recovering elected official so it takes me a little while to get back to speed in doing some of these questions, but my final question is how does that compare to the five-year plan that the City adopted, the 1.5 percent growth?

Sure. The City's five-year plan actually assumes no net job growth and in fact negative job growth over the five-year period, so we are sort of one year into that plan. We've seen 3 percent the past two years. We don't know how the BLS data is ultimately going to come out, but we continue to see growth month-by- month in the actuals. The City has assumed no growth. So any growth that the City receives is going to produce more revenue than what's in the current five-year plan. And the kind of ratio there that I alluded to in the testimony is about 500 million in wage tax alone for 1 percent in job growth, and there would be additional sales tax, other taxes on top of that.

Okay. Thank you.

Yeah. Councilman, we are not saying that every piece of revenue needs to go to this. This is not an either-or moment, and this is something we talk about regularly. We can invest in job growth and in business growth as well as meet the needs of our city in terms of programs and services. It's not an either-or moment. We can do this now. You've heard the testimony now is the best time to do it and we just want to reinforce that message.

As Derek has already said, anything you can provide us in writing we'd be grateful.

Yeah. If you are able to provide that information because I'm very curious in the correlation of the 1.5 percent growth and the reduction in how it impacts the fund balance and how that may not impact any services in the city. That'll be helpful.

Thank you.

Thanks guys.

Thank you.

So the next two individuals we have to give testimony are Ani Joshua and Phil Butler. (Witnesses approached Witness table.)

Good evening. Please state your name and proceed with your testimony.

Good evening, Councilmember. My name is Ani Joshua. I'm the founder and CEO of GoVysh Technologies, LLC. It's a Philadelphia-based SaaS company and we are 100 percent minority-owned. We have a SaaS product which caters to senior transportation and we also cater to school districts across the country and micro transit systems. I'm here to testify today to urge the Tax Reform Commission and City leadership to adopt a bold policy that stimulates private sector growth and job creation. As the data shows, Philadelphia has faced a percent 8 decline in jobs since 1970 compared 9 to growth in peer regions. 60,000 10 residents leave annually with a net 11 loss of 10,000 people citing 12 limited job opportunities, many of 13 which are middle- and upper-income 14 households, further reducing the 15 City's tax base and stresses the 16 public services. 17 Philadelphia's combined 18 state and local personal tax 19 personal income tax rate of 6.91 20 percent is higher than Pittsburgh 21 at 6.07 percent, Chicago at 4.95 percent and Atlanta at 5.49 percent. Philadelphia's local income tax rate of 3.84 percent is disproportionately higher compared to cities with no local income tax like Dallas and Boston. Peer metros with lower tax burdens have attracted more private sector jobs and investment and job creations. As a small business owner, I have two requests for you to consider today: Raising the minimum wages because this will help retain and attract companies, capital and talent making the city and our region a more competitive and attractive destination for business investments. Cutting the Business Income and Receipt Tax, which is the BIRT tax, and wage taxes. Wage tax for the residents to decrease from 3.75 percent in Fiscal Year '25 to 2.99 percent by Fiscal Year 2035. Non-resident wage tax to align at 2.99 percent by Fiscal Year 2035. Gradual elimination of the BIRT income tax reducing from 5.81 percent in Fiscal Year '25 to 0 percent by Fiscal Year '30 because predictable tax reduction significantly fosters private sector growth enabling businesses to expand and hire locally. I want to thank you everybody for this opportunity. I really appreciate it.

Thank you.

Good evening, Chairperson Levy and Stitt and other members of the Tax Reform Commission. I'm Phil Butler, immediate past president of NAOIP Greater Philadelphia, representing the developers, owners and related professionals in office, industrial and mixed-use real estate. As the Commission evaluates opportunities for reforming the City's tax structure, NAOIP Greater Philadelphia urges you to focus on fostering inclusive growth as the central goal. Tax reform is more than a fiscal exercise. It is critical to unlock the economic potential of Philadelphia's businesses, workers and residents. To NAOIP, inclusive growth begins with creating tax environment that incentivizes investments and job creation. Philadelphia's tax structure must be competitive to attract capital, retain businesses and reverse the troubling trends of economic stagnation. Consider this: Since 1970, Philadelphia has experienced tremendous decline in jobs. This loss is compounded by one of the highest poverty rates among major U.S. cities. Our combined corporate tax rate of 14.3 percent puts a stark disadvantage compared to cities like Pittsburgh, as my counterpart stated, Pittsburgh, Chicago, Washington, D.C. The rates of those cities range from 8.25 percent to 9.5 percent. Moreover, peer cities such as Dallas and Denver have no 7 local corporate income tax at all, making their business environments far more appealing. The message is clear, without significant reform Philadelphia will continue to lose out on these cities in the ability to attracting private sector growth and investment. Yet there is a reason for optimism as Philadelphia has demonstrated fiscal resilience with general fund revenues exceeding projections in the last 11 to 12 business cycles. Historical drop growth of almost 1.5 percent annually over the past decade proves that targeted reforms can yield measurable progress and growth, but more is needed. This is the time for bold action and bold intention. NAOIP Greater Philadelphia supports actionable phase tax reforms, including reductions in the wage tax and gradual elimination of the Business Income Receipts Tax, the net income component. We also strongly urge City leaders to revisit the 2022 update to the real estate tax abatement in order to stimulate growth within the commercial real estate sector. These reforms would not only reduce cost for businesses but also level the playing field for competitive cities and provide the predictability that investors and employers seek as they look for cities to funnel the dollars into. In addition, the lower rates would help jobs grow. These are jobs that lift people of poverty, improve public safety and add to the City's tax base to ensure much-needed City services are not endangered. Reforms like these send a powerful signal to the national investor community. Philadelphia is serious about creating a business-friendly environment that supports the growth and opportunity. This is especially vital as we work to attract outside capital investments, which have historically been the lifeblood of our city's growth. By adopting bold, equitable tax policies, we can reverse the trends and drive private sector growth that benefits all Philadelphians. NAOIP stands ready to collaborate with Mayor Parker, City Council and the Tax Commission to implement these transformative reforms. In closing, the choice before us is clear. We can allow Philadelphia to remain at a competitive disadvantage or we can embrace the path that fosters inclusive growth, revitalizes our economy and create a safer, cleaner and greener City for all. It's not going to be easy but it can be done. Thank you.

Thank you. Are there any questions for either of these witnesses? (No response.)

Okay. All right. Hearing none, thank you for your testimony.

Thank you.

The next two individuals we have to testify are Tim Kearney and Lance Haver. (Witnesses approached Witness table.)

I know Lance is making his way down. But, Tim, why don't you just state your name for the record and proceed with your testimony. Thank you.

And, Tim, we applaud your choice of headgear today.

So thank you. Good evening, Chairman Stitt and Vague and members of the Commission. My name is Tim Kearney. I am TURN's representative to the Tax Reform Advisory Committee. Together we have been at this reform effort for more than seven months now and we have learned a lot about the possibilities and limitations for reform. TURN works with many Philadelphians of low income who need assistance to pay rent and make ends meet. TURN also works with Philadelphia residential tenants who have bad landlords. TURN organizes, educates and advocates for housing as a human right. I will make tonight's testimony short and to the point. The three main points I want to point out -- and I did give the written testimony, you should have it in front of you -- is first, I think we should pass Councilwoman Brooks' wealth tax bill. It is our easiest, most direct and practical method to make local taxes more progressive and gain a significantly large amount of badly-needed new tax revenue. Second, automating Philadelphia's low-income wage tax exemption, bolstering it against its eligibility guideline as high as the uniformity clause allows, refunding the PICA carve-out and enhancing it with direct citysupported application, monitoring and acceptance of every known local, state, federal benefit is our next best method to make local taxes more progressive, boost individual household finances for low-income citizens and transform the city. Yes, $450 million annually coming back into Philadelphia's economy from Harrisburg and from Washington, D.C. will transform Philadelphia. If Mayor Parker is listening downstairs, then I volunteer to run this new agency for her and for Philadelphia to get that $450 million every year. The third thing that I've learned that I think that we can do pretty reasonably that would help is that we need to figure out a renter's property tax relief equity program to equal that of what homeowners receive. We have two or three different ways to help homeowners with tax relief, but we don't have the corresponding same benefit for people who are renters. 46 percent of Philadelphia households are renters and many of them are low income and in need of relief just as much, if not more so, than homeowners. What we do here in Philadelphia of course sits within the whole nation and the world. Income inequality in the city, state and nation is bad now and steadily getting worse. Progressive taxation is one of the ways a government Philadelphia can claw back for its citizens, money that is overpaid and lost as subscribers, ratepayers, consumers, toll payers and taxpayers. Our society is getting more economically unequal, corporatized, monopolized and polarized. With proper tax reform, we can push back against these oppressive trends. And I would be glad to answer any questions.

Thank you.

Hey, Lance. Why don't you proceed with your testimony.

Sure. Thank you very much for the opportunity. My name is Lance Haver. I'm a member of the Tax Review Advisory Committee. We should all be able to agree that the status quo isn't acceptable. Too many Philadelphians are experiencing poverty. Too much of the wealth of the city is accumulated in the hands of the few. Thousands of young working Philadelphians cannot afford to buy houses or pay rent and too many people don't have the resources to become entrepreneurs. This should lead us to conclude that what we have been doing doesn't work. Any other conclusion defies logic. The Tax Review Commission is comprised of accomplished, learned women and men. That is why it's so disappointing to find out that what is being discussed and the Commission has already endorsed in private is what the city has been doing for the last years, 12 across-the-board reduction in 13 business taxes. 14 If this trickle-down 15 strategy worked, Philadelphia would 16 not be suffering the income 17 disparity that leads to so many of 18 us struggling with poverty, housing 19 insecurity and lack of opportunity 20 while a handful of others buy 21 multi-million dollar condos. 22 There is still time for 23 the Commission to use its knowledge 24 and skills to chart a new course for Philadelphia. It can and should start by examining the existing tax programs the city uses to help startups and small businesses. We exempt businesses for two years from paying all taxes and have an exemption for revenue. Do these programs work? If not, why not? Why do thousands of new companies not use the programs that exempt companies from paying the taxes? Where is the review of other programs across the country that help startup small- and minority-owned businesses flourish? Where are the new ideas to help startups and small businesses such as insurance and utility buying co-ops? How does reducing a few mils help new companies gain access to capital? Why can't we help small businesses by buying the buildings they're in and helping them take ownership of those buildings? If we can give land to the billionaires for free and then exempt them from paying real estate and use and occupancy taxes, we can certainly help small businesses buy the buildings that they're in. If the Sixers get free city land, can't we help small businesses stay where they are so they can operate? Can the City increase its tax revenues by using net bid contracting and giving advantage to work or own to profit-sharing businesses and use that money to improve our schools and help keep people in the city. I urge the Commission to have the courage to tell the truth. The strategy we've been working according to everybody is not working. Trickle-down economics doesn't work. Acrossthe-board mill cuts will not change the course of Philadelphia's future. It's time to dream of a more equitable future and to create programs that help small businesses and encourage entrepreneurs. A slight reduction in the business taxes gives the greatest windfall to billion-dollar companies at the expense of City service and residents. Such a recommendation is not worthy of all of you. Thank you.

Thank you.

Are there any questions from the Commissioners for either of these witnesses? (No response.)

Okay. Hearing none, thank you for your testimony.

Thank you.

Okay. The next two individuals to testify are Jonathan Stein and Dr. Nikia Owens. (Witnesses approached Witness table.)

Good evening.

Good evening.

Good evening.

I'm Jonathan Stein.

And I'm Dr. Owens.

And I'm a former Director and general counsel at Community Legal Services, a former member of the 2002 Tax Reform Commission. So I'm pretty familiar with your discourse and what you're considering. I have to say though that I did present earlier months ago to you and I'm rather disappointed in the Commission at this point. You have the opportunity to address probably the most equitable tax issue and program that's available to you that's already in City law. That is the city wage tax refund ordinance that has been expanded by Allan Domb, one of your members just a few years ago. It's our local EITC. So it is all the wonderful benefits of being anti- poverty, pro-economic growth because low-income people who get that refund or rebate spend it locally on businesses and services and it keeps families together and deals with all the pressures of being a working poor family. Yet this ordinance is not working as I pointed out months ago. And my disappointment is that in your preliminary recommendations it doesn't appear that you've included reforming the city wage tax refund law. It's not working. There's maybe a percent 3 take-up rate. 1,800 people out of potentially 60,000 are getting it. We laid out in our memo, which is in our statement before you, the reasons for that. You have to first apply and be qualified for the state tax forgiveness. That itself has a very low, below-poverty level eligibility standard which excludes lots of working poor families in Philadelphia. There's paperwork burdens, and it's not even a complete exemption because the 1.5 percent tax which is still continuing, although it's a crazy tax because the bonds have been paid off by PICA and yet $700 million of City wage taxes are collected every year to go to Harrisburg and then back to the City in 24 or 48 hours. So it's an anachronism. It's 1.5 percent setaside. Yet the City wage tax refund law which was never considered in the PICA reauthorization continues so that low-income families can get the full 3.75 percent reduction or rebate. This is an issue that cries out for reform. And you may be considering, because I'm certainly up on the currents of your discussions, some kind of a wage tax broad across-the-board cut which has been done before. And just let me say that if that's the way you're going, a marginal wage tax cut will be virtually invisible to anyone even receiving it. It will have no economic impact that's visible. And yet it will be distributing scarce City revenues for what purpose. And the better, smarter, more targeted way of going is a targeted wage tax cut that is already part of the City Code, that is, the city wage tax refund ordinance, and building on that policy already established by substantial majorities of City Council of the last years, 9 building on that, making this law 10 work. 11 And then your wage tax 12 cut would be targeted to the 13 neediest people, the working poor 14 who we want to incentivize and 15 reward work for. We want to deal 16 with their pressures of trying to 17 exist in the city in poverty, and 18 this is the equity mandate that the 19 Home Rule Charter that has given 20 the Commission to promote tax equity. This is the equity issue you should be grappling with. And I'm happy to answer any questions you may have or if Dr. Owens wants to add anything, she can as well.

By the way, thank you very much for your testimony. Thank you for your testimony. I would just make the note we have not made any recommendations preliminary or otherwise heretofore.

Okay.

And we've appreciated your testimony previously and now. So thank you for being here.

Okay. Well, I appreciate your statement. I hope this issue is still open for your final deliberations. Thank you.

Okay. Any questions for the witnesses?

I have a question for you and Dr. Owens.

Yeah. Sorry.

I'm curious in reference to, one, I just want to put on the record my understanding is that there would be no uniformity clause issue with this amendment to the code, that's correct?

There would be no uniformity clause issue if the eligibility was expanded to include, as we are suggesting, the PACENET pharmaceutical standard, which interestingly the City Council just a year ago, as you know, Councilman Green, former Councilman Green, adopted for the property tax frees for low-income and senior citizens. And the key, as I think your question is going to, is that as long as the state legislature has created a poverty class in some statute, the City can adopt that class for its purposes. Now, it adopted a very narrow class a few years ago, which is this state tax forgiveness which says if you earn more than $8,000, you can't get any state tax forgiveness income tax nor can you then get any rent, any wage tax refund because of the tie-in between the wage tax refund law and the state tax forgiveness, so yes. And the City Law Department did issue as a result of our testimony a number of months ago issued to you, the Tax Commission, a memo from September 2024 that agreed with our position that it is constitutional under the uniformity clause to have the City substitute another eligibility standard for the one in the current wage tax ordinance. And I'm glad they agreed with us because we think this could be done.

Yeah. Have there been any past legislative attempts to make this change that you're aware of? And if there had been in the past, what was the impediment for it becoming law?

Excuse me. I didn't quite --

Has there been any legislative attempts in the past to address this issue and if there has been, what were any of the impediments for this becoming law?

Yeah, I'm not sure --

It sounds like -- hold on. It sounds like just a simple amendment to the Code to make sure that the City is adopting the PACENET standard, so I'm curious if there's been past legislative initiatives. You made reference to former Councilmember Allan Domb, my former colleague, and some of the work that he's done. But I'm curious if there's been any legislative attempts to make this change?

Yeah, not that I'm aware of. And when I talk to Allan as part of the Commission's public hearing, which is really a wonderful aspect of the fact you do have these public hearings, Allan said that at the time when he expanded the breadth of the wage tax refund, the Law Department didn't feel at that point in time that they felt they needed to use the state tax forgiveness. Since then apparently they're aware and certainly the City Council, as you know, adopted a year ago the property tax freeze ordinance, which uses the PACENET pharmaceutical eligibility standard which is a little bit more comparable to the federal EITC, earned income tax credit. And so, we think that this is constitutional. It's really a policy decision of City Council and the Mayor, and we hope that this Commission will be recommending in its recommendations to the City that the ordinance be amended to include PACENET, that the 1.5 percent PICA because once it's collected we think the state law obligation's been met, but once that 700 million comes back to the City it's in the general revenues and the City could use that money or some small piece of that money for wage tax refunds, so you can essentially exempt the entire higher 3.75 percent wage tax from a targeted group of very low-income working families, and I think that should be a goal of this Commission frankly.

And so, to make this change is simply adopting the poverty class from the PACENET pharmaceutical assistance program?

Is --

To make this change that you're recommending is simply adopting the PACENET pharmaceutical assistance program stand in for poverty?

It would expand the eligibility, yes.

The other and final question, do you have any perspective on the cost? If this change would occur, what the cost might be? And also, have you had any perspective on how that would increase enrollment and use of this initiative?

A good question and it's a question that the Advisory Committee to your Commission through your staff asked maybe four or five months ago. We posed this very question because we knew this would be a recommendation to expand to PACENET. And I believe we asked for it to be costed out. It might be different if you guys ask if it's costed out, but at least from the Advisory Committee has never got a response about the cost of expanding eligibility. But we do know even with the limited restricted eligibility of the state income tax forgiveness, the estimate of the City was something like 60,000 working families could get the current tax refund under the limited eligibility. Yet of the 60,000 eligible, only 1,800 or so are getting it. So you have these big gaps in enrollment and takeup that need to be addressed.

Last question: Are there any thoughts, perspective you have on how to enhance the usage, what's currently available that even if there was some change that occurred will be a better way to get more people to participate in the program?

Well, that gets into the -- yes, I think there are a number of things that could be done to streamline and, in fact, that Law Department opinion that you received in September actually also agreed with us that there could be streamlining in terms of paperwork burdens and application barriers, so there are obvious real problems in any rebate or refund that requires somebody to know about it, apply for it, jump through the hoops and the like. Some of those hoops can be minimized. And my colleague Dr. Owens who leads the campaign for Working Families, they deal every day with barriers of people seeking federal EITC and other tax benefits, and I think this City wage tax refund is ripe for streamlining and making it easier to obtain.

Thank you.

Thank you, Councilman Green.

Jonathan, before you go, I just wanted to say that we'll look into that PACENET question. I understand that the staff has provided a number of things over the last few months, but we'll circle back with you soon on that. Thank you for your testimony.

Thank you.

Okay. The next two witnesses to testify are Rob Zuritsky and Harvey Spear. (Witnesses approached Witness table.)

Good evening.

Good evening. MR ZURITSKY: And Happy New Year. Thank you. I'm Robert Zuritsky and I'm representing both the Philadelphia Parking Association and the many businesses and workers who depend on parking for their livelihood in Center City. I have been testifying for tax relief in this room for most of my 35 years of being a professional in Philadelphia, and for that I have seven tax increases for that work. On behalf of the people that are here in the room 21 that are concerned about parking and everyone else who depends on it for their livelihood, I'm here asking for tax relief this time not from parking tax but from Use and Occupancy Tax for the parking industry. The first slide -- I hope everybody has these slides, they were supposed to have been given out to you -- this is the tax history for the parking industry. 14½ of that dollar to the City in many different forms of taxes. We are now in Center City paying between 43 and 67 percent of what we collect from the public to the City directly. That's not talking about state and federal taxes, 67 percent. The last slide I'm going to show you shows you a real-life example of this. At the bottom of the slide, it lists all of the 13 different taxes and fees that parking is subjected to. 10 of them are from the City and then you have state and federal taxes. So the next slide. Thanks, RJ. This is -- I hear about uniformity a lot, and this is comparing the parking industry with like real estate. You have apartments that are paying about 10 percent of what they collect. 11 Hotels have their own tax, they 12 have a hotel tax. 5 13 percent. 5 percent just 14 for parking which is the top three 15 in the country for just parking 16 tax, and they don't pay Use and 17 Occupancy Tax, hotels. Office buildings do pay Use and Occupancy, but they don't pay a hotel tax or a parking tax. So then the last one is where it shows the unbelievable tax burden for mostly Center City properties. What's fascinating is that most parking spaces in the city only pay the parking tax. 66 percent of the paid parking facility spaces in the city only pay the parking tax, so it's Center City that is really only whacked with this triple tax, right. I just want to draw attention to the parking tax, real estate and use and occupancy tax. So next slide please, RJ. This is what we looked at where all these parking spaces are, right. They're at the airport, University City, the stadiums and then Center City. So 100,000 paid parking spaces, all of these, the stadiums, the University City and the airport only pay the parking tax. Center City is where we get the 10 tax burden. Okay. But the Parking Authority doesn't pay those 10 taxes. They only pay parking tax. And the hospitals, Jefferson Hospital, the assets they own, they only pay parking tax. So you could have a parking facility, Harvey could be running a parking facility across the street from a Parking Authority garage, same concrete, same lights you have to repair, and we're paying three times as much as that parking facility is across the street. So what's happening from that? Next slide. We're losing parking facilities at an unbelievable clip. This is the last 10 years. We've lost 165 parking facilities in the city, 9,000 parking spaces. We used to have 50,000. Now, we have 41,000 spaces. Okay. Next slide please. What does that mean for the citizens of Philadelphia, right? Who is parking with us? 50 percent of our customers are Philadelphians. They are workers, they're nurses, they're hotel cleaners. These are working-class folks and they have seen their parking rates go up 100 percent in the last years. 8 Hotel rates just as an 9 example used to be $35 for valet, 10 and it's $70, $75 for hotel parking now. And it's because these four garages have recently closed. They're well-located garages. Two of them are next to Jefferson Hospital. One of them's across from the Convention Center. One of them is on the Avenue of the Arts.

The owners have determined to just let them deteriorate and collapse and fall down rather than maintain them and be in the parking business. So you've got a lot of inflation -- yep, go ahead. This is hot off the press. We just closed 24, right, and this is a real life example of a parking lot. It's a 40-space parking lot. The operator works their asses off to generate $12,000 per space on this parking lot. So the topline revenue is $480,000. You might consider that a small business in Philadelphia, $480,000. That's not Comcast or Aramark as you've heard today. Guess what they paid in taxes, $321,000, in the 10 taxes. 67 percent of what was collected there went to taxes. Payroll was 96,000. Parking tax was 88,000. Real estate tax was 115,000 and U&O is 97. The City is supposed to be about small businesses and paying salaries, fair salaries. The City isn't picking the pocket of the parking industry. They're taking the pants, the overcoat and the shoes off of the parking industry. This parking facility lost $8,300. It doesn't have a mortgage. If it had a mortgage, it would have lost $165,000. So this is the situation with the parking industry. We have been coming in here -- Harvey and I have been coming in here for decades saying that our tax burden is too high. What's our future, right. We're going to welcome in 2026 the world to Philadelphia, World Cup and all of these great things. We're losing a thousand parking spaces a year. We are both developers also in Philadelphia and we can't afford to put a single parking space into any of our developments. I've done four. I wanted to put them -- they were all on good parking lots. I wanted to put parking into it. I can't do it because the City gets 40 to 60 percent of everything we charge, plus it costs a hell of a lot to build parking nowadays. So the issue is what is -- to conclude, what is the City -- this is an infrastructure play for the city. The City can decide to give the parking owners enough where they can maintain their assets so they don't collapse and just close them. There's no 12 business in the country that is taxed like this. There's no 14 industry that's ever -- somebody's here from SB Metropolis. They're the largest parking operator in the country. And I asked Pam today, have you ever seen a parking operation anywhere in the country that charges 67 percent in 10 different taxes for an industry. She said, no, I've never heard of this, maybe in the whole world. So that's where we're asking for Use and Occupancy Tax relief. It only affects really Center City. It's a targeted tax relief and we've come up with some ideas where it's easily replaced or the tax burden would be shifted.

Thank you. Thank you, Rob, for your testimony. We're really going to try to stick to the three minutes. I mean, it's already a little bit past 6:30 so we're really going to try to adhere to that. Can you proceed with your testimony please.

Yeah. Harvey Spear. I have to add that the U&O tax when it started way back, I'm old enough to remember when Wilson Goode the mayor started it, was like 2 percent. It's now equal to the real estate tax. So just figure that if you have a property almost equal -- if you have a property that has real estate taxes, double that and that's what the U&O tax is now today. I have to introduce myself. I was president of Old City District, Chairman of Old City District, Patco President, Riverwest President and E-Z Park's President. I've been around a long time. I'm not a youngster and I've seen a lot of things happen. I have to tell you that the City is in big trouble because what we all are doing, we don't coordinate, we don't know. I don't even know what deals he has, but three or four of our locations now are either up for sale or development. One of them is at 5th and Bainbridge which is the only place at South Street that people go to. And if you know what's happening on South Street, it's going through a transition. We are now -- everybody we're talking to is giving us ideas to build with no 6 parking. Parking for the private individual apartments, that's it. We're not going to have public parking. Front Street right now in Old City, we're talking to a few people about that, no parking. 15th and South, same thing, no 14 parking the developer is talking about it. This is because it's impossible to buy a parking garage or parking lot. We also have a parking garage at 21st and Chestnut right now which is for sale, and we have somebody talking to us. He's going to be building actually next door to a property that Rob Zuritsky's family just sold and he's looking for parking, and only for the building that he's building. It's going to have a supermarket and it's going to have apartments, no 5 parking except for what he wants to buy ours for. I have to say the U&O tax is the killer. The real estate tax is one thing. In addition to that, as Rob said, we pay federal, state and local taxes. So every dollar we take in, like he said, at least $0.60 goes to taxes. Thank you.

Thank you very much.

Stefan, I have a question.

Sure.

So I want to make sure I understand what I think you presented in the information you provided to the Commission is that the City's parking tax burden, City of Philadelphia is higher than New York City, D.C., LA and Boston?

Absolutely.

100 percent. Boston has zero parking tax.

Okay. And then what is the differential between onstreet versus off-street parking in reference to cost and how does that compare to other cities?

Onstreet parking, we did a little survey ourselves. Onstreet parking is $3 per hour in Philadelphia. It's been $3 per hour for I think 10 or 11 years or something. Compared to San Francisco, it's as high as $10. Chicago is as high as $7. New York is as high, it can be 9.50 and Miami is 4. So our onstreet rate is $3. It's very inexpensive. And our offstreet rates, some of the garages are charging $25 for that same hour.

So the distinction -- well, the difference between onstreet and off-street, especially with those cities like New York and D.C. and LA and Boston is much closer than here in Philadelphia which has a higher burden?

Is in the higher?

I said the difference between onstreet and off-street for cities like Boston, D.C., New York, LA is much closer compared to Philadelphia where we have a higher tax burden?

That's exactly right. So what you have is more congestion and pollution because people are just searching around for $3 parking. I mean, yeah, the differential is unbelievable.

And as you were concluding your testimony, you said something about some ideas to address the issue. Is there anything you can provide or suggest?

Just that you could easily replace it with going to $4 like the rest of the cities are doing now. The Parking Authority I know has lost a lot of onstreet parking because of bike lanes and things like that. I think they would be in favor of it or they could even do flex parking and raise the rates like San Francisco actually flexes up the rates when demand changes. So the actual meter rates on the street changes.

So the idea of changing the onstreet parking to similar rates like other cities that have a lesser burden, it's something that could be explored as a way to try to even the challenge and that will impact some of the challenge you're talking about?

I think there has to be a -- the burden on the parking is too high. And like I said, I can't even -- I'm building new office buildings. We're adding 4,000 people to an area and we took out all of the public parking and I can't afford to build back any public parking because I would lose money every single space. Underground cost $165,000 a space to build now. Above ground could be 65,000 to 75,000. You'd have to charge $1,000 to $2,000 for a monthly -- our rates are not that high. I mean, it's really not fair and uniform -- it doesn't compare to any other categories of real estate. Office and hotel and apartments are way lower than the parking. It's just wrong.

I could give you an example. If you go to some place like Chinatown and get a meal for $20 or $25, you're going to pay double that to park, and that's what's happening. People tell me, boy, you must be making a lot of money, $50 to park. That's the rates now. And what happens is up to 60 percent of that goes to taxes so people don't understand that. And just so you know how it affects not only us but it affects the restaurants. More and more restaurants and gyms and every other activity are out of the city today.

One thing I just want to leave you with. We lost 9,000 spaces over the period of time and it's because of all the new things that were built, right. We added millions of square feet of new things to Center City. That's great. You lose another 9,000 spaces, you go from 41,000 to 32,000 spaces in the city, we'll be $60 to $100 to park in Center City.

Exactly.

Any other ques --

It ain't going to work.

Thank you.

Thank you very much. Thank you guys very much.

Thank you.

Okay. The next two witnesses for testimony are Burnell Goldman and Annie Allman. (Witnesses approached Witness table.)

Good evening.

Good evening. How are you doing?

All right. How are you?

Good. Thank you for having me. Appreciate being in front of the Commission. My name is Burnell Goldman. I am the General Manager of the Model by Hilton Philadelphia, Rittenhouse Square. It's a relatively new hotel and our hotel is 252 rooms. It has three restaurants. It's a nice hotel. It's one of the newer hotels in Philadelphia, but it doesn't have parking. It is totally dependent on the lot right across the street, which is a valet parking garage. And if for some reason that lot decided to close or just close up shop or decide to do something else, we would be in rough shape. We would have to go several blocks away or to just completely change our business model if something happened, if they decided to close up. So I just wanted to kind of bring that to your attention. It's a great hotel, but our business model would change if that would happen. The other thing is the parking rates currently are very high, and it's high because of the taxes that were just brought up previously. And those parking rates are passed on to our employees. They do have a subsidy, but the subsidy is still very high for our employees. And most of them because of that reason don't park because of that. It also is an issue for employment. Individuals that are looking to work at the hotel have to figure out if it makes sense for them to do that because of the high rate of parking at the hotel. So most of them do take public transportation as a result. And then of course our guests, the reason that we have the hotel, that's the biggest reason, the biggest issue. Our guests have sticker shock when they come into the city. They are upset because of the high rate of parking. And it's not so much one hotel versus the other. It's just that the rate is just so high in the city of Philadelphia. And the other -- the last thing is the restaurants that we have. We have three restaurants in our hotel and because of the high rate of parking, it is in jeopardy based on the high rate of parking tax as well. So I am asking for a reduction in the Use and Occupancy Tax as it relates to parking as well. And it would definitely help not only our hotel but the individuals that serve the hotel, our employees and of course our guests which is the lifeblood of our hotel. Thank you.

Thank you.

Thank you.

Good evening. My name is Annie Allman. Thank you for the opportunity to speak tonight. I'm representing the Reading Terminal Market Corporation, which is the nonprofit steward of Philadelphia's treasured public market. Our ability to continue forward is contingent on a thriving busy Center City and one that is accessible, inviting to all transportation modalities. We are located in a great location right across from Jefferson Station, but we also rely heavily on drive-in. In particular, our customers that drive in to visit us are those that really go to our purveyors. Our purveyors are our butchers, our produce, our fishmongers and that's what really keeps the Reading Terminal Market authentic as a public market and not just devolving into a food hall. It's really important that we have access to parking garages that are clean, inviting and affordable. Additionally, our 78-or-so family-owned businesses located within the market and many of their nearly 600 employees that work in and support the market, many of them utilize the nearby structured and surface parking lots. As Philadelphia continues to rebuild the city-based workforce, affordable and well- maintained parking is necessary for many that cannot access public transportation due to home location, distance or work schedules. On behalf of our customers, our employees and our business owners, I support your consideration of tax reduction for the Philadelphia parking industry. Thank you.

Thank you very much.

Are there any questions for these witnesses from the Commissioners? (No response.)

Hearing none, thank you for your testimony. Okay. The next witnesses for testimony are William Glazer and Gwen McCauley. (Witnesses approached Witness table.)

Good evening.

Well, good evening. Look at this Commission. This is like the dream team of Philadelphia business leaders. It's terrific. You should be testifying instead of me, but I'm Bill Glazer. I have a company called Keystone that is a commercial real estate investor and developer in the city of Philadelphia. And I have for you today an anecdote and a recommendation. The anecdote is a friend of mine, who is also a large commercial real estate developer, sent me a research report from a large investment bank on real estate growth nationally. And the report tracked data on inbound traffic by state from the company U-Haul. And you might not be surprised that for years the top 4 states, the winners of the business 5 most traffic were Florida, Texas, 6 the Carolinas. The bottom 10, the 7 losers of the most business, 8 California, New York, Illinois and 9 Pennsylvania. 10 So you can draw whatever conclusions you like from the data, but what's clear is that the tax regimes with the highest taxes are disincentives for business. So said differently, if there's something that you don't want in the city like traffic congestion, you put congestion taxes in place. If there are things you really don't want in the city like cigarettes, alcohol, you put sin taxes. But if there are things that you really want to keep out of the city of Philadelphia like highpaying jobs, like retail shoppers in your stores and restaurants, like travelers with really fat expense accounts, then you tax them at the highest rates and we won't have that problem. So my recommendation is, my recommendation is that Philadelphia today is sitting on a singular opportunity in its history. This is at minimum a century opportunity and that is 2026. 2026 Philadelphia will be on the world stage. The entire world will be looking at us. And if we can be in action today, it's January of '25, if we can be in action today, we have the largest opportunity in the city's history to capitalize on the biggest denominator effect the city's ever seen. Thank you.

Thank you. MS. McCAULEY: Good evening and thank you for hearing my testimony today. My name is Gwen McCauley and I'm the corridor manager for Manayunk. I work for the Manayunk Development Corporation also known as MDC, and we do the work of the Manayunk Special Services District, which is one of business improvement 10 districts in the city. 11 Our mission is the 12 economic viability of the district. 13 That's what we do all the time. 14 We're partners with Manayunk small 15 businesses, Manayunk property owners, Manayunk RCOs and many different government agencies, and all of our concerns is how to make Manayunk better. Often when people think of Manayunk they think of parking issues. And as you can imagine, a parking perception problem is a burden for small businesses located in the area. Available, reasonably-priced, convenient parking is essential to any small business. We take parking seriously and we constantly monitor the parking conditions of our neighborhood. MDC operates four of the lots with close to 400 parking spaces. We have a 20-year relationship with Parkway, and they manage these lots for us. And Parkway has also been our revenue department, tax credit partner for the past 14 years. Our district borders Montgomery County where parking for local shopping and restaurants is more often than not free. So a consumer can shop and park for free less than a mile away from Manayunk. So as a result, we need to manage parking rates accordingly keeping parking rates very low. We're probably the lowest in the city. I'm listening to the $3 PPA rate which I know, which is also my parking. Philadelphia having one of the highest combined tax rates in the country means that the margins for my net profit are dwindling in order for me not to pass along that cost to the customer. So I'd be remiss to not explain to you what I do with the money that I get from the parking. So our nonprofit does -- what we do with the net income is 100 percent of this money is used for Manayunk District, whether it's street maintenance -- I'm almost done -- beautification, trash cans, trash removal, planters on corners, decorating for the holiday, lighting, cameras, arts murals. I'm doing everything I can to draw people to my area. Every dollar is making a difference to the Manayunk community. Every dollar spent is making city-owned property inviting for residents and visitors. Lastly, I wouldn't have done my job here today if I didn't make sure you heard this message. The impact to the small business of big parking rates is crippling. So this testimony is not just about large parking corporations and developments being taxed more. This is true ripple-down effect. The important message, that is, affordable parking is key to dynamic neighborhoods and the city as a whole. So you can let me know if you have any questions, but that's my testimony and I really thank you for hearing me out today.

Thank you for your testimony. Do any of the Commissioners have any questions for these witnesses? (No response.)

Hearing none, thank you. Okay. So the next two witnesses to come and testify are Reginald Goins and Fran McGorry. (Witnesses approached Witness table.)

Good evening. MR. McGORRY: Well, good evening, Commissioners, members of the Tax Reform Commission. My name is Fran McGorry, co-founder, CEO of Liberty Coca-Cola based right here in Philadelphia, so thanks for the opportunity to speak. We'll be quick. Liberty Coke has a long history in Philadelphia providing jobs, giving back to the community. We support lots of local businesses. We have 3,100 associates, 600 associates based in our Philadelphia plant in North Philly where we produce all the products there and deliver. Today I want to speak about the beverage tax. It's been implemented 2017. It has really led to a significant decline in taxes and also shifted a lot of the business. You heard from several folks, including Jeff Brown. We changed how we went to business. We shifted a lot of business outside of the city and therefore we shifted jobs outside. Beverage tax was really intended to generate revenue for crucial city services, but it also has unintended economic consequences. We're losing Philadelphia consumers that pay on average an astounding 32 percent tax. You heard an example from Jeff Brown. It's 100 percent tax on a 2-liter bottle. It's a dollar a bottle tax on a dollar retail. Our sales data show that we've had a 45 percent drop in beverage sales in Philadelphia since the tax inception. Sales surrounding area, the suburbs, is a percent increase. The 8 discrepancy really demonstrates the 9 consumer behavior. Many people 10 just travel outside of the city. 11 They're not just picking up their 12 beverages. They're picking up 13 their entire baskets. 14 You hear that from Acme, 15 Shop Rite. The businesses are 16 losing a significant amount of 17 revenue, also the revenue that really generates the taxes for the city. Liberty Coke has lost over a million cases delivery out of the city. It's almost 5 percent of our entire business in the city and the burbs combined. The ripple effects of the tax are far-reaching. We've seen significant reduction in traffic and local storage, job losses. For Liberty Coke it really necessitated us shifting business out. So just closing, we really believe in the revenue that's generated, the necessity of the services that it provides. However, we think there's a more equitable way that we could fund those services. The beverage tax in its current form just place an undue burden on the mom-and-pops, the consumers that can't drive outside the city and as you heard from the previous speakers, pretty, pretty significant. Just one additional fact. In addition to Philadelphia, there's only one major city in the U.S. -- we're the only major city in the U.S. that has a soda tax. Chicago repealed i's sweetened beverage tax several years ago. West Virginia repealed it last year. So we're just asking given the considerations of what's going on we urge the Commission to really repeal the beverage tax in its current form. So thank you just for listening and appreciate the support for sure.

Thank you.

Please proceed with your testimony.

My name is Reginald Goins. I'm the President and COO of The Honickman Companies. The Honickman Companies, we own and operate beverage companies from New York all the way down to the North Carolina border. In the Philadelphia area we operate a Canada Drive business that's in Philadelphia proper. We have Pepsi businesses that are in New York and around the suburbs of Philadelphia as well. Fran's testimony is absolutely accurate. We have a similar situation in that after the beverage tax was implemented over the last seven years we have lost 46 percent of all beverage sales in this Philadelphia area. And at the same time, we have seen a significant increase in the surrounding areas. So Southern New Jersey, right outside of Philadelphia, we've had a spike in volume over the same time period, and that 46 percent drop in sales actually translates into about 40 percent of our employees that worked in the city of Philadelphia. Now, we've redeployed those same 40 percent of our employees to outside of Philadelphia, to Southern New Jersey, into the suburbs of Philadelphia because that's where the volume is, that's where the shoppers are, and it has to be an unintended consequence that having a beverage tax has shoppers going outside of the Philadelphia area, we are doing everything we can. But it is absolutely directly correlated to the beverage tax. What we also see, as Fran said, is it actually hurts the businesses. And so, we have seen a significant drop in the number of small businesses that have been able to operate because they're losing not just the beverage sales, because when someone goes shopping outside the city they're not just shopping for beverages, they're going to buy everything they need to buy. And so, it's again unintended consequence. Last piece I'll say is a little bit of a personal situation. As the President of the company, I grew up inner city of Chicago, didn't grow up in Philadelphia. And I grew up the youngest of 4 children, extremely poor situation. 5 And when I see what's happening 6 here in Philadelphia, the people 7 who are actually paying the 8 beverage tax are the poor people. 9 It's the people like me when I grew 10 up, because you couldn't afford to 11 drive 10 minutes outside of 12 Philadelphia to actually go buy 13 your grocery or buy your beverage 14 outside of Philadelphia, so you have to walk to the local store, buy whatever is there and pay whatever price is there. So again, I don't sit here before you as a person who knows Philadelphia better than anybody here. But I absolutely know poor people and I know what it takes for those people to actually get by. And having a tax basically that's on the poor is absolutely probably not what you all intended, but that's what's happening. So I just wanted to say thank you for hearing us out, really appreciate the time. And if there's any questions, I'll be happy to answer them.

Thank you.

Thank you. Any questions from the Commissioners? (No response.)

Hearing none, thank you for your testimony. The next two witnesses we have are Daniel Grace and Jeff Garis. (Witnesses approached Witness table.)

And as they're making their way forward, if there's anyone who is not currently signed up to comment and they would like to speak, please see my colleague Christina over here on the side to sign up.

Good evening.

Good evening, members of the Commission. My name is Jeff Garis and I'm the Outreach and Partnerships Director at the Pennsylvania Policy Center. I'm here today to present testimony on behalf of Marc Stier, our Executive Director and a senior consultant to the Advisory Committee to the Tax Reform Commission. Dr. Stier cannot be here tonight. Testimony tonight is a preview of an indepth paper we will be releasing in about two weeks, entitled Philadelphia Needs To Create Jobs and Reduce Poverty, Business Tax Cuts Won't Do It. This paper gives an overview of job growth, poverty and taxes in Philadelphia and explains in detail why substantial business tax cuts are not the best way for our city to create more jobs and reduce poverty. Before I hit a couple of the key points in this paper, I want to make a remark about the current political context in which our city will have to make budget and tax decisions. Marc Stier could not be here today because he's speaking in an event in Luzerne County about the coming threat of Donald Trump and Republicans enacting deep cuts to Medicaid and the Supplemental Nutrition Assistance Program, SNAP formerly known as food stamps, which helps low-income individuals pay for food. They plan to implement these cuts in order to pay $5 trillion to $7 trillion to tax breaks for billionaires and wealthy corporations. It is possible that hundreds of thousands of adults and children living in Philadelphia will lose access to food in the form of SNAP and access to health care in the form of Medicaid. This will not only create distress for those directly affected but will also cause deep financial losses for our health centers. City agencies will be stretched to make up for some of these cuts and will have to deal with the pain and suffering of our families and children that the cuts will cause. That will be especially difficult because we anticipate deep cuts to federal programs that provide funds directly to this city. So this is not the time to propose deep cuts to any taxes. I'm going to quickly summarize the points of this forthcoming paper which can challenge the conventional narrative about taxes in the economy. Seven points: First, Philadelphia is not a job creation basket case. While the City lost more jobs relative to other cities in the Northeast and the Midwest in the last quarter of the 20th century, jobs have been increasing in Philadelphia faster than in most of those cities since we entered the 21st century. Two, it was not high business taxes that explained Philadelphia's loss in jobs in the last quarter of the century. Philadelphia's job losses in the last quarter of the 20th century were a product of the national shifts in manufacturing from the Northeast and Midwest to the South and Southwest, which occurred later in Philadelphia than in some of these other cities. Once Philadelphia's decline in manufacturing jobs ended around the year 2000, the qualities that make our city an attractive place for business to come to the forefront we now have faster job growth than other cities in these regions. Third, taxes in Philadelphia are not much higher than those other cities in the Northeast and Midwest and are not at all higher than those in our suburbs. The taxes on those which have high incomes, the people that are supporters of lower business taxes, seek to recruit to the city are lower than in other cities. Fourth, slow job creation is not because of Philadelphia's high poverty rates. The best evidence we have is that entrenched poverty, especially in the Black community, was created and sustained by public policies that created a highly segregated City. Both Black and White people with low incomes in Philadelphia are cut off in various ways from the dynamic sector of our economy, not at least because they don't receive an adequate education. Fifth, substantial reductions to business taxes would be enormously costly to city revenues and would not create many jobs or reduce poverty.

In fact, we estimate that a cut in the net income portion of the Business Income and Receipts Tax, BIRT, would cost the city more than 3 billion over 10 years and would create only 50,000 jobs in Philadelphia beyond the 200,000 jobs we expect the city will create without any tax changes, and more than 80 percent of the newly- created jobs would go to people moving into the city, not to current Philadelphians. So business tax reduction is an extremely inefficient path to reducing poverty and creating jobs for current Philadelphians. Six, cutting business taxes would shift the task of generating revenue to property taxes. However, Philadelphia benefits from relying more heavily on business taxes than property taxes to fund its operations. Our low property taxes create incentives for the housing development that has brought new people into the city. New businesses do not make a profit for a few years but do not pay property taxes. So our current reliance on business taxes rather than property taxes encourages small businesses, including manufacturing to locate and create jobs in the city. S. in terms of jobs have been Boston and San Francisco and they have been moving now in the direction of Philadelphia by shifting from property to other taxes. Seventh and finally the most efficient way to reduce poverty and spur economic growth generally, is to adopt targeted poverty reduction strategies that have worked effectively in other cities. Besides huge improvements in public education, these strategies include workforce training that connects low-income Philadelphians to existing jobs, investments in commercial corridor improvements, providing low-cost capital to business startups, especially those owned by Black people and women, and creating tax breaks for the conversion of Center City commercial buildings to residences that include affordable housing units. $3 billion spent over 9 years to support these programs 10 would create tens of thousands of jobs, reduce poverty and make our city safer and more attractive to everyone, current Philadelphians as well as newcomers. Thank you for hearing my testimony today.

Good evening, Chairperson Vague and Stitt and the members of the Tax Reform Commission. My name is Danny Grace. I am the Secretary Treasurer of Teamsters Local 830. Our union has proudly represented the hardworking men and women in the beverage distribution industry since June 25, 1942. Thank you for this opportunity to speak before you. For a large portion of my career I was a transport driver for Pepsi- Cola. For the past 30 years I have dedicated my life to ensuring that drivers like me have fair working conditions and can achieve decent quality of life. It is unfortunate that the Philadelphia beverage tax has made that mission incredibly difficult. As of February 2025, I will have 50 years in this industry. Although unintended, the impact of the Philadelphia beverage tax on businesses has been overwhelmingly negative. Since that implementation of beverage tax, we've seen a dramatic decline in sales by as much as 50 percent. This has not only reduced income for our workers but has threatened the jobs directly. We have lost jobs and members directly because of the Philadelphia beverage tax. Losing union jobs in Philadelphia means the loss of the city's soul. Our members play a critical role in the city's supply chain ensuring that beverages and other goods are delivered efficiently across Philadelphia. The health of the beverage industry directly impacts the job security and quality of life. Since the tax was implemented in 2017, major distributors and retailers such as Canada Dry Delaware Valley, Brown Superstores have reported significant drops in revenue leading to job cuts, reduced hours. For example, Canada Dry has a decline of at least a third of their business over the year, translating into layoffs of about 30 people of their 165 employees locally. Layoffs are not just numbers. They represent individuals and families who are now facing uncertainty and hardship. These significant sales declines result in massive reduction of routes for our drivers. In many cases, routes were cut entirely compelling our drivers to cope with fewer hours and reduced pay. As a result, our members experienced severe cuts in their take-home pay with some seeing reductions as high as 70 percent. These impacts are not isolated to incidents and have also led to closures of small grocery stores, restaurants. Philadelphia beverage tax will continue to negatively affect the well-being and economic stability of numerous families across the communities. Since Philadelphia's beverage tax window effect, companies have laid off our members who work in the city. As consumers travel outside the city to avoid the tax, companies have decided to alter the routes and negatively impact local workers. Given this severe impact of our members and broader community, we strongly advocate for the repeal of the beverage tax. The negative outcomes far outweigh any fiscal benefits that were projected. We recognize that eliminating the tax may be a long process. Therefore, in immediate future we urge the City to reassess the impacts of the tax and consider alternative, less destructive means of raising revenue that do not disproportionately impact a single industry and its workers. We understand a need for additional City revenue and support public services, but it should not come at the expense of our members' livelihoods. Thank you, Chairperson Stitt and Vague and the members of Tax Reform Commission, for your attention to this critical issue.

Thank you.

Any questions from the Commissioners? (No response.)

Okay. Hearing none, thank you for your testimony. Next, I'd like to call up Kamolika Das and Brett Bessler. (Witnesses approached Witness table.)

Please state your name and proceed with your testimony.

Good evening and thank you for this opportunity to testify. My name is Kamolika Das and I'm the Local Tax Policy Director at the Institute on Taxation and Economic Policy or ITEP. I've lived in Philadelphia for about three years and my daughter will start at Nebinger next year. We plan to live here long term and I'm heavily invested in the prosperity of our city. C. We conduct rigorous analyses of tax and economic proposals and provide data-driven recommendations to shape equitable and sustainable tax systems. So just to start off, sophisticated studies by both ITEP and Stanford researchers find that corporate tax cuts do not primarily grow local economies. Instead when corporations pay less in taxes the ultimate beneficiaries are the owners of corporate stocks. Most benefits flow to foreign investors. A third flows to the richest percent of households and another third flows to the next richest, percent. So in all 90 percent of the benefits go to foreign investors and the richest 12 percent of households altogether. 13 So you hear a lot of 14 anecdotal data about people and 15 businesses moving to low tax areas 16 but study after study hasn't 17 supported that. This makes sense 18 given that taxes generally make up 19 a small portion of business 20 expenses compared to labor property expenses, manufacturing costs, cost of managing supply chain and so on. Businesses care far more about having an educated workforce and reliable infrastructure. I also want to question the assumption that Philadelphia's businesses are struggling to afford the BIRT and net profits tax. We know from Pew's research that only around a quarter actually incur a BIRT liability and that the median BIRT bill is only $1,300. And while the Commission is charged with examining the City's overall tax system, it would be a mistake to ignore the broader context here. Following TCJA, the 2017 federal tax law, virtually every business including large corporations and smaller passthroughs saw substantial tax reductions. 6 billion from the federal tax cuts, and then the state has piled on. In 2022 policymakers cut the corporate income tax rate in half over eight years. Pennsylvania already lost nearly $130 million in revenue in 2023 and this will cost us nearly 1 billion in 2031. So Philly can't afford more tax cuts. We're already facing a situation that could lead to higher expenses and tighter budgets. Over the past few years Philadelphia received over $1 billion in federal funds that we won't have access to going forward. Philadelphia also receives a lot of aid from the federal government, but the incoming Trump Administration has indicated plans to cut $500 billion in annual spending. We don't know yet exactly what these will entail, but we can imagine there will be less direct federal aid that states and localities will need to offset. Cuts to housing aid, food assistance, health care infrastructure, in other words, Philadelphia needs to raise more revenue just to maintain current services. So we're having the wrong conversation. Instead of trying to figure out how to continue cutting corporations for businesses that have already benefited wildly from federal and state tax cuts, we should be discussing how to progressively raise revenue and cut taxes for those with the least means. , and we found that Pennsylvania ranks fourth most regressive in the nation. So, for example, obviously there's not -- Philadelphia cannot make up for all of these state and federal changes, but what we can do is not add to this regressivity. Philadelphia should explore options to expand property tax circuit breakers, especially for renters, and make the wage tax refund program more accessible, not cut taxes for businesses. Thank you very much. And I'm happy to send you all of these reports.

Please do. Thank you.

All right. Good evening. My name is Brett Bessler. I'm the Vice-president and Business Agent, proud member of ASFCME District Council 47, Local 2186 representing municipal employees. Anybody in the room if you support our municipal employees in D.C. 47, let me get a hell yeah. There you go. I know there's a lot of developers and stuff and bosses so that's why it was a little low. Tonight I'm here to deliver public comment, with the support of D.C. 47 President April Gigetts, as representatives of thousands of City employees and advocates for the residents that they serve, we must express our profound concern regarding the mulling over of proposing reductions to the BIRT tax. These tax cuts will not benefit City employees and they will not benefit residents, the residents that they support. Instead they risk creating a revenue loss of up to 300 million per year with no clear tangible plan to offset this significant loss. To put this figure into perspective, 300 million is the equivalent of the combined FY25 operating budgets of DBHIDS, Philadelphia Parks & Recreation, the Office of Homeless Services, the Free Library of Philadelphia and Licenses and Inspections. Alternatively, this amounts to the entire operating budgets of Philadelphia Public Health Department, Streets and Sanitation combined. I dare you to frame this in that way to citizens. With the potential federal and state funding cuts looming due to changes in national leadership, now is not the time to exasperate our challenges with internal revenue reductions that we can control. Cuts like the ones under consideration will inevitably lead to reduced city services that all residents depend on. They will also force our members in D.C. 47 to continue to deliver more with less, an already unsustainable expectation. Currently the City's vacancy rate remains around percent. How can we make the City of Philadelphia a more attractive employer to recruit the "best and brightest," that the Mayor refers to if we impose these cuts? How will the City afford fair, just and robust contracts for municipal unions in 2025? How will the City meet additional demands of hosting global events such as the World Cup, MLB All-Star Game and America's 250th anniversary in 2026? The answer is simple, we will not. If we continue down the path of regressive tax policy, we will fail to meet the goals of the current Mayoral administration. And more importantly, we will fail our residents. We urge you to reconsider these proposed cuts, instead adopt a proactive and progressive approach to our tax structure to ensure the delivery of high-quality consistent services for all residents of the city of Philadelphia. Thank you.

Thank you.

Any questions from the Commissioners for these witnesses? (No response.)

Hearing none, thank you for your testimony. And finally, I'd like to call up Erme Maula. (Witness approached Witness table.)

Also, is there anyone else who would like to testify who hasn't given testimony yet? (No response.)

Great.

Hi, friends. I feel it's apropos that I get to wrap it up tonight.

That's right.

So Erme Maula. I'm a member of the Tax Advisory Committee and just a regular ole person coming to talk to you. Stefan, Richard and Matt, thank you to you and the Tax Reform Commission for having a public testimony session afterwork hours to accommodate those of us who work a 9-to-5 job. I'm a community health nurse, a wife, a reading captain, a friend of the library, a friend of my local park and, most importantly, a Philadelphian for over 30 years. My name is Erme Maula and I care about my neighborhoods and the community is (inaudible) and far from me. I live and vote in the Whitman section of Philadelphia. Over the past few years I have advocated for public services that serve all of our communities, those housed and not, those without home computers or Internet access, those who may not speak English as a first language, those needing to navigate through our city resources, those needing a safe, warm space to be during these 11 degree days, those needing mental 12 health services or resources, our 13 youth, our schools, our elderly 14 and, most importantly, our City 15 workers that keep essential 16 services running. 17 Libraries and our City 18 parks and rec centers are our last 19 non-commercial spaces for people to 20 be in. They are all essential services for those who use them but also for those who work in them. Our City revenue funds these essential services to keep our city green, lean and thriving. These services, however, cannot thrive without proper funding, funding that funds our HVAC systems or water heaters that libraries need to function, that keep the park grounds clean and safe to play on, that fund enough staff to open safely to the public and enough programming and materials to deliver necessary resources to all of our communities. City revenue is important to create pathways for young people to have the proper training to move up through our municipal system of careers, acquiring degrees at the Community College of Philadelphia and ensuring that there are jobs to fill within the city. City revenue creates jobs and helps invite and keep talented people into our city and stay in the city. If we cut the revenue necessary to ensure this, which decreasing the revenue brought in by big businesses would do, we do not generate the revenue needed to ensure that we have the salaries offered to keep the talent needed to keep Philadelphia running. We do not ensure that all municipal workers make a living wage to thrive in our city. We do not ensure that we have the facilities available to house our municipal workers. With the loss of COVID money and the promises of this new federal administration to federally take away our social safety net, I am fearful that we won't be able to take care of our most vulnerable neighbors. Please look long-term and ensure that we can generate the revenue we need to ensure that Philadelphia stays the city we all love. Taxes are our main way we generate revenue. Let's generate that revenue from those who will still thrive even with paying the tax, the millionaires and the wealthy and not from those who are barely able to maintain their businesses or livelihood. The cost of living will continue to increase. Let's not burden those Philadelphians who are already so burdened. Let's look long-term and come up with creative, innovative and different strategies than those that have shown to fail our most vulnerable neighbors, like we don't want to be closing libraries in neighborhoods, closing schools and not incentivizing our youth to be proud City workers and stay here. Creating more revenue, creates more jobs in our city and more services for our residents. Create that revenue. Don't stunt it. We are only as strong as our most vulnerable Philadelphians. And our most vulnerable Philadelphians need new strategies to generate revenue in our city. Please keep that in mind. Thank you and have a good night.

Thank you. Seeing that there's no 12 one else here to testify, we thank everybody for coming out to our public hearing tonight. This concludes the Philadelphia Tax Reform public hearing and thank you for joining us.

Thank you. (Tax Reform Commission Committee concluded at 7:26 p.m.) C E R T I F I C A T I O N I, hereby certify that the proceedings and evidence noted are contained fully and accurately in the stenographic notes taken by me in the foregoing matter, and that this is a correct transcript of the same. __________________________________ TANEHA CARROLL