Philadelphia City Council sets property tax rate, passes cigarette tax

PHILADELPHIA - June 14, 2013

The council on Thursday approved a 1.34 percent property tax rate by an 11-5 vote. It comes as the city implements a new tax system known as the Actual Value Initiative, which officials say is aimed at correcting a system where homeowners had long been taxed on a fraction of their home's assessed value. The council also approved a "homestead exemption," which is for people who own their home and live in it, that could knock $30,000 from a homeowner's assessment.

"With the setting of the new property-tax rate and the homestead exemption, Philadelphia has entered a new era of fair, accurate and understandable property-tax assessments," said Mark McDonald, a spokesman for Mayor Michael Nutter.

The council also passed a new $2-a-pack cigarette tax aimed at generating money for schools. A proposal to increase the liquor-by-the-drink tax from 10 percent to 15 percent has stalled. Both would require approval from the state Legislature.

A spokesman for Senate Majority Leader Dominic Pileggi, R-Delaware, said discussions continue on the requests, including Philadelphia's request for an additional $120 million in school aid from the state.

"Many other districts face similar challenges. It's extremely unlikely that the General Assembly would be able to provide additional resources for one without doing the same for the others," said the spokesman, Erik Arneson. "Discussions will continue, but at this moment there's no obvious path to reach the outcome being sought."

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