Could Philly increase the city sales tax? - Technical.ly Philly

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Feb. 13, 2009 9:02 am

Could Philly increase the city sales tax?

Deep in the Great Recession, the City of Philadelphia will need to either cut spending by another $200 million, or it could raise the local sales tax rate (again).

The City of Philadelphia, like cities around the country, is balancing budget problems with a reputation for being quick to tax

Photo by Christopher Wink

The City of Philadelphia is on, like, round eight or something on budget cuts.

There was the $1 billion budget deficit for fiscal year 2009 that Mayor Michael Nutter introduced in November. Oh yeah, and there is another $1 billion shortfall looming for next year and spread for the next five years, Nutter says. He says the city needs to cut spending by $200 million.

That, you know, or we could raising the local sales tax rate.

During his recent budget address, Pennsylvania Gov. Ed Rendell floated the idea to let counties levy a one percent additional sales tax to help cash-strapped local governments.

If he was wondering what the Pennsylvania electorate might think of his proposal, it seems seven out of ten commonwealth voters oppose the concept, according to a Quinnipiac University poll released Wednesday.

That might frustrate Nutter, who could expect to see as much as $128 million more from the increased taxed – assuming consumers wouldn’t shop elsewhere, like sales-tax free Delaware.

Currently only two of Pennsylvania’s 67 counties already have a sales tax more than the state’s six percent. They are Philadelphia and Allegheny counties – the latter of which is home to Pittsburgh, the state’s second largest city – each of have seven percent sales taxes.

Of course, a disinterested public doesn’t mean the tax increase won’t come.

This comes after Nutter signed Tuesday an executive order creating a task force on tax policy. One of his campaign’s pledges was to reduce the city’s often criticized wage tax, but his rollbacks have been set aside among a worsening fiscal outlook for the city.

One thing Philly and small business probably don’t need is an increased tax, but the Quaker City might benefit if surrounding suburban counties bumped up their sales tax. That might help make Philly commerce more competitive, or just drove shoppers to freakin’ Delaware.

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…Nah.

Read how Philadelphia’s budget problem has gotten so stark.

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