Can Philadelphia Council Close Deal on 10-Year Tax Abatement?

Philadelphia City Council President, Darrell Clarke is pursuing to introduce two changes to PlanPhilly, the current 10-year property tax abatement plan before a new City Council takes a seat in January with new members “who campaigned to kill or radically restructure the tax break.”

Historically, the Philadelphia tax abatement plan was passed in 1997, and the current plan was set in 2000. An akin plan was set in the 1970s, but with a 25% shorter time of 30 months.

One change Clarke is pursuing will be a per-unit cap on the value of the abatement. Currently, it is unclear what the cutoff value will be. The second change includes a slow winding down of the abatement plan. An example of how the winding down would work is that property owners would get a 100% tax break in the first year, and a decrease of 10% each of the following years, bringing the value down to half.

Tax abatement was a heavy topic in the recent elections as some residents have pointed out that neighbors are living in much larger homes and not paying fair real estate taxes. Helen Gym, a councilmember and education advocate, voices that the current tax abatement plan is basically in some ways a thief of the financial future of the city of Philadelphia. “Tax subsidies are tools that must evolve as our economic needs change.” The current plan “robs public schools of funds because more than half of each real estate tax dollar goes to the school district.”

A slight rush exists on changes due to the results of the November election when a council seat traditionally held by Republicans was claimed by Working Families Party’s, Kendra Brooks, who pushed ending the property tax abatement in her campaign. Gym believes that if changes are voted on before January, reform will be possible.