Title
May 15, 2003
To the President and Members
of the City Council of Philadelphia:
I am returning herewith as disapproved Bill No. 030163. Council passed this bill at its session on May 1, 2003.
While I fully appreciate and support the intent of this bill to ease the burden for low-income taxpayers, the fact is that the City cannot afford the resulting revenue loss, estimated to be almost $73 million over the life of the FY04-FY08 Five Year Plan and at least $80 million annually when fully implemented, and service reductions that would inevitably follow. Moreover, the group of citizens that would be aided by this measure will be helped by the tax reform measures in Governor Rendell's Plan for a New Pennsylvania, but at no cost to the City treasury. That Plan has my complete support.
Under the Rendell Plan, all Philadelphians would receive a 13.5 percent reduction in the City wage tax, to a rate of 3.89 percent. This benefit would be paid for with new, offsetting state revenues. In addition to receiving the wage tax cut, low-income taxpayers would be able to take advantage of exemptions to the Pennsylvania Personal Income Tax (PIT). Thirty-one percent of Philadelphia PIT filers participated in the state's Tax Back/Tax Forgiveness program in 2000; the eligibility threshold would be expanded under the Governor's proposal, and with growing awareness, more Philadelphians would be expected to apply. Low-income citizens would receive the most benefit from the Governor's Plan.
Philadelphia has weathered the effects of the prolonged economic recession better than most states and cities, including maintaining a $364 million local tax reduction program while other jurisdictions are raising their taxes. Nevertheless, we face enormous financial challenges, which my Administration has been attempting to address responsibly and with minimal impacts on service. The FY 04-08 Five Year Plan submitted to you in January, contained s...
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