April 24, 2003 TO THE PRESIDENT AND MEMBERS OF THE CITY COUNCIL OF PHILADELPHIA: I am returning herewith unsigned Bill No. 030073, passed by the Council on April 3, 2003. Bill No. 030073 would provide relief from overall property tax increases in the form of wage tax reductions. To the xtent City real estate tax revenues overall grow by more than two percent in a given year, the bill would require the City to reduce its wage tax rates in the folowing year by an amount sufficient to reduce wage tax revenues by such "excess" real estate tax revenue growth. The wage tax reductions any individual taxpayer would receive as a result of this bill are unrelated to any property tax increase a tax payer may or may not have experienced. While this is an interesting approach, I belive it is an issue that should be considered by the Tax Reform Commission. I also believe the City may need to reevaluate its impact once sttewide tax reform and budget amendments now under considerati0on h...

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April 24, 2003

TO THE PRESIDENT AND MEMBERS

OF THE CITY COUNCIL OF PHILADELPHIA:

I am returning herewith unsigned Bill No. 030073, passed by the Council on April 3, 2003. Bill No. 030073 would provide relief from overall property tax increases in the form of wage tax reductions. To the xtent City real estate tax revenues overall grow by more than two percent in a given year, the bill would require the City to reduce its wage tax rates in the folowing year by an amount sufficient to reduce wage tax revenues by such “excess” real estate tax revenue growth. The wage tax reductions any individual taxpayer would receive as a result of this bill are unrelated to any property tax increase a tax payer may or may not have experienced.

While this is an interesting approach, I belive it is an issue that should be considered by the Tax Reform Commission. I also believe the City may need to reevaluate its impact once sttewide tax reform and budget amendments now under considerati0on has been enacted. Only one year ago, I signed into law a five year, incremental wage tax reduction bill passed by this Council. Governor Rendell has proposed a program tht could, if enacted, allow us to provide substantially more wage tax relief. Unlike Bill No. 030073, the Governor's proposed program would not only allow for meaningful reductions in wge tax rates,but it would also provide revenues to compensate for reduced wage tax revenues, thereby allowing the City to have the benefit of a more competitive tax structure without losing revenues that it needs to provide services to Philadelphians.

I have not vetoed this bill because it will not impact City finances until FY 2005 and with the understanding from the sponsor that this matter may need to be revisited at a later date.

Respectfully submitted,

John F. Street

Mayor

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