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Sources of Funding

 

Debt service payments on general obligation and other tax-supported debt are paid from the general fund, which is the main operating fund of the City.  Based on the Fiscal Year 2011 Adopted Budget, below is information on the five largest sources of tax revenue in the general fund.

 

Wage Tax

The wage and earnings and net profits tax (the wage tax) is the City's largest source of tax revenue, budgeted to account for almost half (45.5%) of general fund tax revenue in fiscal 2011. The wage tax is collected from all employees working within City limits and from all City residents, regardless of their employment location.   

 

Property Tax

The property tax (or real estate tax) is a tax levied on the assessed value of residential and commercial property in the City. The property tax is budgeted to generate 20.1% of general fund tax revenue in fiscal 2011. In fiscal 2011, the property tax increased by 9.9%.


Business Privilege Tax

The General Fund's third largest tax revenue source is the business privilege tax (BPT) which is a tax on both net income and gross receipts. The BPT is budgeted to generate about 14.9% of the City's general fund tax revenue. Like with the wage tax, the City has been lowering the business privilege tax rate on an annual basis.


Sales Tax

The sales tax is budgeted to account for 9.8% of general fund tax revenue in fiscal 2011. The state legislature authorized imposition of a local 1% sales-and-use tax under the PICA Act of 1991, and the tax was first collected in October 1991. The City sales tax increased from 1% to 2% effective October 8, 2009.

Real Estate Transfer Tax

Philadelphia charges a 3% tax, known as the real estate transfer tax, on every sale of real property in the City. (An additional 1% is levied by the Commonwealth of Pennsylvania for a total for 4% tax on real property sales.) In fiscal 2011, this tax is expected to generate about 5% of general fund tax revenue.

 


Additional information on the City's Sources of Funding can be found in the Fiscal Year 2011 Operating Budget Summary and Budget in Brief