Placing wagers on wage tax

As the chances for bringing slot-machine gambling to Pennsylvania improve, odds favor some state residents receiving different tax breaks than others.

Long touted as a magic bullet for property tax relief, gambling legislation instead would lower the wage tax for Philadelphians under the latest proposal.

State Sen. Vince Fumo has been the driving force behind the gambling bill, which would bring 5,000 slot machines to 14 venues across the state.

Operating under the theory that wage tax reductions would boost the city in the long run, Fumo fought for them over property tax breaks.

"We believe that in many cases, businesses will benefit from a reduction in the wage tax," said Gary Tuma, Fumo’s spokesperson. "Right now, Philadelphia businesses, due to the wage tax, have to offer higher salaries in order to attract workers.

"This will allow businesses to save money, maybe allow them to get those employees at a lower wage. We think this will keep businesses from leaving Philadelphia."

The proposed legislation hammered out between the state House and Senate last week would distribute $1 billion in slot-machine revenue for property and wage tax relief.

Originally passed by the Senate last year, the bill would offset homeowners’ property tax bills by funneling gambling funds directly to local school districts.

Even with the purported benefits, the plan is not without its controversy.

Robert Siddall, a psychologist from Southwest Philadelphia and self-proclaimed thorn in the gambling lobby’s side, views the legislation as a series of inequities wrapped in the packaging of educational benefits.

He points out that just a select group of 20,000 of the city’s 160,000 seniors would be eligible for property tax relief that was originally hyped as a statewide perk.

While conceding that the wage tax cut could attract jobs, Siddall also argues that residents of the nearby suburbs will receive a double benefit.

"If the rationale is that Philly gets wage tax reductions, well, so do commuters from Montgomery, Berks, Bucks, Delaware, Chester, Lancaster and Lehigh counties," he said. "If the rationale is that you can’t have both, why do suburban commuters get both?

"Some Philadelphians will get one, if they are employed, but 140,000 retired property owners will get none. The Constitution requires equal treatment under the law."

Despite such concerns, it looks as if the legislation is a go.

Fumo has been fighting to restore some components of the original legislation, which has undergone serious changes since being introduced almost 14 months ago. The Senate passed the original version, which contained a variety of safeguards against corruption, on June 25, 2003.

The House watered down those measures before passing the bill last July.

Fumo has been in negotiations to have many of the safeguards returned to the legislation before it goes back for a vote.

The senator’s provisions would include an up-front licensing fee that will result in a one-time infusion of $610 million to the state treasury, a ban on all political campaign contributions from slot operators, a central control system and the right for the state to collect revenue before slot operators do.

"These are changes that Sen. Fumo has fought for," said Tuma. "These are things we anticipate being in the final version of the bill."

The original bill called for licenses at eight racetracks. The new proposal calls for 12 licensed venues, four or five of which will be non-racetrack slot parlors in urban areas, as well as licenses for two resorts.

"We expect that there will be a stipulation that two of the non-track parlors will be allotted to Philly," said Tuma.

Last year, an investment group had proposed a racetrack south of the Packer Avenue Marine Terminal, but the legislature has since designated much of that land for port use.

So the city will rely on slots to compete with Atlantic City and other gambling venues, and possibly to attract more people to the waterfront.

However, as of yet, Tuma was unable to confirm whether one of the city’s two non-track parlors would be in South Philly.