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.
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.
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.
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