Study: Philadelphia Could do More to Curb Tax Deliquency
A new study that looked at 36 U.S. cities found that Philadelphia has the fifth-highest rate of tax delinquency, with 9 percent of same-year taxes going unpaid in 2011, the most recent year with comparable data.
By Sean Collins Walsh
Over the next few years, Philadelphia should be able to collect about 30 percent of the half-billion dollars owed to the city by delinquent property taxpayers, according to a new study by the Pew Charitable Trusts.
The city can bring in about $155 million of its $515.4 million in uncollected taxes and penalties if "well-funded tax collectors use all of their statutory powers, including foreclosure," the study said.
The study looked at 36 U.S. cities and found that Philly has the fifth-highest rate of tax delinquency, with 9 percent of same-year taxes going unpaid in 2011, the most recent year with comparable data. Compared to cities with similar poverty rates, however, Philly has been roughly on par.
Cities with high collection rates, the study found, adhere to strict timetables about when and how to go after deadbeats. Philadelphia tax collectors, on the other hand, have greater leeway in using collection tools and apply them inconsistently.
The 70 percent of taxes deemed "most likely uncollectible" include properties in less desirable neighborhoods, homes in poor condition, owners with high tax debt and those who have been delinquent for a long time.
Those factors decrease the likelihood of a property owner responding to the city's collection efforts and help explain why Philly and other cities with high poverty have lower collection rates
Still, Philly is leaving money on the table.
"The city certainly could do better," said Thomas Ginsburg, project manager at Pew's Philadelphia Research Initiative and author of the study.
The debate over property-tax delinquency took center stage earlier this year as the city moved toward adopting the Actual Value Initiative, or AVI, the overhaul of the property-assessment system Mayor Nutter has promoted. AVI, which aims for more accurate assessments of property values, begins next year and will result in higher taxes for many homeowners whose properties have been undervalued for years.
A recent PlanPhilly/Inquirer investigation highlighted the city's poor performance on collections and revealed a ripple effect of problems for neighborhoods with high delinquency.
Nutter in February announced a series of measures intended to crack down on tax deadbeats, including the creation of a chief collections officer.
The administration says it will collect $28 million more in delinquencies next year, although that number includes more taxes than just the real estate levy.
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