Philly may cut its parking tax to lure visitors back to town

Philadelphia City Council is considering reducing the parking tax rate in an effort to lure visitors back into the city as the pandemic wanes.

Councilmember Cherelle Parker introduced a bill Thursday that would reduce the tax from 25% to 17% beginning in July. She said the legislation, which was cosponsored by six of her colleagues, would “signal that Philadelphia is serious about our economic competitiveness.”

Council voted last year to increase the parking tax — already higher than in many other large cities — from 22.5% to 25% to help fill a budget hole caused by the pandemic. Still, parking tax revenue has declined significantly in the last year as the economic impact of the pandemic continues.

Last year’s hike came with an agreement that the rate would be reduced again after a year. That reduction to the earlier rate of 22.5% was reflected in Mayor Jim Kenney’s budget proposal for the next fiscal year, which begins July 1.

But Parker said a bigger cut is necessary. She hopes lowering the parking tax would get more parking lot and garage workers back to work and also help the hospitality and entertainment industries recover.

“By taking this small step we would be incentivizing growth,” she said.

The proposal comes after several councilmembers, including Parker, expressed skepticism about Kenney’s proposed cuts to wage and business taxes. Councilmembers were especially critical of a proposed wage tax cut for suburban commuters, saying the city should instead focus on its own residents.

» READ MORE: Some suburban commuters might not return to Philly. City Council is skeptical of giving them a tax cut.

The fate of the legislation will hinge on budget negotiations, as it would have to be approved as part of the budget. Council began holding hearings on the budget this month and must vote to approve a spending plan before the end of June.

Councilmembers Curtis Jones Jr., Mark Squilla, Bobby Henon, Derek Green, Brian O’Neill, and David Oh cosponsored Parker’s bill.

Deana Gamble, a spokesperson for Kenney, said the administration was still reviewing the proposal.

Parking tax revenues have declined more than 56% during the current fiscal year compared with last year, according to the Pennsylvania Intergovernmental Cooperation Authority.

Parker also led a push last year during budget negotiations to create a “Good Parking Jobs for Philadelphia Review Committee” made up of workers, the parking industry, and councilmembers. That committee is tasked with assessing the parking industry’s progress in creating good jobs. Parker said the committee will meet next month, but informal discussions have already begun.

That committee does not have the authority to determine the parking tax rate, but Parker said she hopes workers and parking executives can reach an agreement to improve wages and benefits.

“I will not move forward with this legislation unless there is much-needed compromise between the two,” she said.

Also Thursday, Council voted to approve legislation that will enable the city to borrow $400 million for Council President Darrell L. Clarke’s Neighborhood Preservation Initiative, which would fund affordable housing, restoration of neighborhood shopping corridors, and other programs aimed at reducing poverty. Council voted last year to enact a 1% construction tax and a 10% reduction in the commercial tax abatement. Revenues from those tax changes will pay for the debt on the bond.