A pair of dreadful ‘Philly specials’ By Matt Wolfe

This article was published by Philly.com. Click here to read the article on the publisher’s website.

Don’t do us any favors . . . Please.

Whenever the state Legislature, in its infinite wisdom, carves out an exception to a law to “help” this city, it somehow always ends up hurting Philadelphians.

Originally, only Philadelphia was allowed to assess a wage tax. That action, more than any other, has led to a huge loss of residents and jobs over the years.

When the state let Philadelphia assess a 1 percent sales tax on top of the 6 percent state tax, Philadelphia was the only municipality forcing its businesses to charge the higher rate.

That was done so that the city could issue bonds to pay operating expenses, the functional equivalent of taking out a mortgage to buy groceries.

Philadelphia was the only place in the state where the sales tax was 7 percent rather than 6, which chased business out of the city and sent residents scurrying across the county line for big purchases.

Now Mayor Nutter, besides wanting to jack up our real estate taxes, wants to raise our sales tax again to the highest rate in the state. But this change is not solely in the hands of the mayor and Democratic majority City Council. The state must pass legislation to carve out another exception for Philadelphia.

An increase in the sales tax for Philadelphia alone will put it at yet another competitive disadvantage. Shoppers will be paying 2 percent more than in any of the surrounding Pennsylvania counties. Maybe not much when buying a cup of coffee, but for an expensive item like an appliance, or a Christmas shopping spree, it’s significant. It’s particularly a problem for a retailer on a tight profit margin.

Nutter calls it a “Penny with a Purpose.” The only purpose I see is to effectively hang a banner at the gates to the city proclaiming “Your Business Not Wanted.”

Another scheme Nutter has concocted – along with City Controller Alan Butkovitz – involves shifting pension costs to future taxpayers. While it’s somewhat technical and not very sexy, it basically would weaken some of the requirements that have been place in order to ensure that our massive pension funds are secure and able to meet their obligations.

Two of their proposals require the Legislature to pass a law allowing the city to make the changes that Nutter and Butkovitz support. This legislation would let the city spread its gains and losses on investments over 10 years rather than the current five, and let the city lengthen the payment period for the pension deficit to 40 years from the current 20.

Let’s presume that the current law was put in place based on standard accounting practices.

So why should the law be changed just because city’s leaders structured taxes to decimate the tax base over the last 50 years of Democratic rule and have repeatedly squandered tax dollars on corruption and patronage?

Does anyone really believe the changes that Nutter and Butkovitz want will really work to make our pension funds stronger and more likely that we’ll be able to meet our obligations?

If the state Legislature thinks these are such good ideas, all I ask is that they raise the sales tax to 8 percent for everyone in the state, with 2 percent going to the municipality in which the item is sold, and change the pension code for all municipalities in the state.

What Philadelphia needs to do is cut its budget and not further drive taxpayers and businesses out of the city. It requires cutting out waste and corruption, as well as prioritizing the rest of the money. We can’t be all things to all people and need to focus on core municipal functions. Contrary to Nutter’s statements, we CAN cut our way out of this “crisis.”

The Philadelphia media like to say that the rest of the state, and legislators from outside the area, hate Philadelphia. If the Legislature votes against these latest plans because they hate Philadelphia, so be it. But its members really should vote against them because they want this city to reach its potential to become an economic engine that benefits the entire state. *

Matthew Wolfe is a member of the Republican State Committee from the 7th Senatorial District in Philadelphia. He’s writing for the Loyal Opposition, a Republican policy group focused on issues facing the city of Philadelphia.

 

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