PHILADELPHIA- Small business owners have called on the administration to use available data to improve business regulations, optimize business services, reduce permitting and licensing hurdles, and reduce wage and business taxes for small businesses.
City Council Introduced an Ease of Doing Business resolution with ten co-sponsors calling for reforms to the city’s tax structure.
While the resolution recognizes the importance of improving the ease of doing business to the stability of communities and families, noting that improving how the city fosters business could produce more good-paying jobs, helping lift individuals and communities out of poverty. City Council seems to focus more on tax breaks for large corporations than the more substantial needs of the community to streamline systems integral to small businesses and start-ups in the city.
Philadelphia is ranked 71 out of 80 U.S. cities for ease of business, according to a 2020 report by Arizona State University. It is below the national average in job growth, with a growth rate of only 1.6 percent of private sector growth in the Philadelphia Metropolitan area. When Camden and Wilmington are included, it drops to 1.1 percent, according to the Bureau of Labor Statistics.
According to the 2022 Philadelphia Ease of Doing Business Survey, 55 percent of businesses still hadn’t recovered from the pandemic. At the same time, 48 percent of respondents said crime impacted their recovery. Sixty-five percent of small business owners with 1-5 employees said they wouldn’t recommend doing business in Philadelphia.
Philadelphia’s Business Income and Receipts Tax (BIRT) taxes businesses at a rate of 6.25 percent on profits and 1.415 percent on sales per 1,000 dollars; it is the only large city that does both, 11 of the 30 largest cities tax one or the other. Exasperating the situation is the host of tax incentives and exemptions, often referred to as tax expenditures.
These tax expenditures are often touted as investments in attracting, growing, and maintaining businesses or the tax base. Critics see these exemptions as a drain on public resources with little accountability or evidence that they work. “A lack of detailed accounting prevents a systematic process of evaluating whether these policies are justified in relation to their benefits,” concluded the Pennsylvania Intergovernmental Cooperation Authority in 2012.
“We have to be intentional, not accidental,” Romana Lee-Akiyama, Executive Director of the Mayor’s Office of Public Engagement. “Intentionality is the key to growth in our communities.”
Many small to medium size businesses find this cornucopia of taxes, incentives, and exemptions confusing. Combining this with the difficulty of dealing with the city’s agencies, regulatory structure, and raising capital, It’s a miracle any small business can get off the ground.
“I was renting a place on 13th street, and I was going to invest a 100 thousand dollars into renovations and construction, but we couldn’t get momentum from the city on permitting, so we had to let the lease go; we lost 10s of thousands of dollars,” said Chance Anies owner of Tabachoy a Filipino Restaurant in South Philly. “We were lucky to have enough capital to get back on our feet and move forward with the restaurant; for many others, this sort of setback would have been the end of their dream.”
“We need city folks to come out and interact and listen to the community, ” said Pheng Seng, owner of Unrivaled. “We need them to make things easier for small businesses, less red tape, streamline taxes, and the SBA process, make it less technical.”
In 2019 Philadelphia Officially adopted the Philadelphia Business Owners’ Bill of Rights, which outlines the rights of every business owner; rights like transparency, fairness, and consistency in applying regulations and procedures. The issue is that 87 percent of business owners aren’t aware of this document.
“当我们刚开始经营时，我们不知道应该去找谁；我们需要更好地宣传小企业的项目，” Seng说道。
“When We opened, we didn’t know who to go to; we need to publicize programs for small businesses better,” said Seng.
“可获得性是非常重要的，我花了几周时间申请我开业所需的资助，虽然我来自金融界，知道自己在做什么，但可获得性的缺乏可能会是一个巨大的障碍，” Baby’s Filipino Kitchen and Market的老板Raquel Villanueva表示。
“Accessibility is essential, it took me weeks to do the grants I needed to start my business, and I knew what I was doing because I came from the world of finance, so accessibility or the lack of it can be a huge hindrance,” said Raquel Villanueva, owner of Baby’s Filipino Kitchen and Market.
If Philadelphia wants to improve job growth and create opportunities for entrepreneurship, it needs to listen to small businesses and the communities they’re in, not the billionaire class who already have all of the resources they could ever want. Small businesses are the backbone of this city but have the least access to capital, city agencies, and services. Streamlining regulations, taxes, and incentives and making agencies more accessible and accountable to communities would drive business growth and job creation.
