The Kenney administration will provide tax relief for businesses and restaurants who have seen their revenues plummet under the novel coronavirus pandemic restrictions.
The administration will exempt bars and restaurants from paying the Use and Occupancy Tax on the portion of their businesses used for indoor dining that have been closed since Nov. 20 under the city’s coronavirus restrictions.
The tax holiday will span the final six weeks of the year and is estimated to cost the city $10 million. The tax is a 1.21% levy of the assessed value of a business.
Businesses can now amend their estimated payments for the Business Income and Receipts Tax (BIRT), which imposes levies on profits (6.25%) and sales (1.415% per $1,000). Businesses that change their previous estimates can expect refunds of the difference within six to eight weeks.
The administration also will delay the payment deadline for the city’s $500 refuse collection fee to June 30, the final day of the fiscal year. Half of the fee, which small commercial businesses and multi-unit property pay for trash and recycling collection, was due by the end of the year.
Mayor Jim Kenney said the measures will provide some relief without negatively affecting the city’s budget. The city also will continue to petition the state and federal government for more financial assistance.
“I recognize that none of these changes will be enough to fully overcome the impact of an economic downturn that has hit certain sectors, including restaurants, tremendously,” Kenney said. “But rest assured that within the constraints of the city’s own budget, we will be looking at new ways to provide relief.”
Steven Scott Bradley, chairman of the board of the regional chapter of the African-American Chamber of Commerce, said the new tax initiatives were “overdue.”
Bradley called for the Kenney administration to move more aggressively to help city businesses and workers, and reconsider the city’s ban on indoor dining at restaurants and bars. Indoor dining is currently permitted in eateries in the surrounding counties and New Jersey.
“We’ve got to continue to keep the city as competitive as possible,” Bradley said. “I wish we would have done some of these things earlier than now.”
The coronavirus pandemic has led to a sharp economic downturn and opened a $750 million budget hole in the city's spending plan this fiscal year. The initial job losses hit the service industry the hardest, an industry where Black and brown workers as well as women are over-represented.
After an initial widespread shutdown at the start of the pandemic in Philadelphia, the Kenney administration eased restrictions to allow indoor dining at restaurants and bars in September.
A resurgence of the virus here has led the Kenney administration to reinstate bans on indoor dining at restaurants and other restrictions through the end of the year. Several businesses in the city have temporarily closed for the rest of the year or until the new restrictions are relaxed.
West Philadelphia bar and restaurant owner Seba Tedla said the new tax initiatives were “insulting" and would not significantly help her business survive the pandemic.
Tedla, the owner of Booker’s, called for officials to offer more substantive assistance, such as tax brakes on the city’s liquor tax or vouchers for utilities.
But as labor remains her top cost driver, Tedla said small businesses need another round of Paycheck Protection Program loans, a federal program created in response to the pandemic that would forgive the loans if at least 60% was used to cover payroll.
“Our elected officials do not get the business model,” Tedla said. “And the gesture is insulting … because when you are making business decisions, those are not the cost factors that I think about.”