Today, Mayor Michael Nutter is making a trip to Harrisburg to lobby state lawmakers to raise Philadelphia's sales tax from 7% to 8%. The tax hike, which would be in effect for five-years, is a central component of Nutter's plan to deal with the $1.4 billion hole facing city government. If he fails to get approval, the city will be faced to make drastic cuts to services and layoff thousands of city employees.
Nutter has a tough task ahead of him. Already, two members of the Philadelphia legislative delegation-- Brendan Boyle and Mike O'Brian-- have expressed skepticism about increasing the sales tax. An even bigger roadblock could be the Republican-controlled Senate, which has already vowed to oppose any tax increase to fill the state's growing budget gap.
Despite these challenges, Mayor Nutter does have several compelling arguments for why the city should be able to raise the sales tax. Below are some of the reasons why state legislators could be persuaded to support Mayor Nutter's proposal.
Not just a local problem. Unlike previous fiscal disasters (see: Rendell, 1992), the current problems cannot be blamed on the city alone. Every major city in the country is having severe financial problems and the same can be said for smaller municipalities across the state. In fact, the state government has a projected deficit of nearly $3 billion in this year alone. The sheer size and scope of the economic downtown means that no state lawmaker can claim that there isn't really a problem. It also means that the traditional argument against helping Philadelphia-- that corruption, waste, and mismanagement are to blame for the city's problems-- doesn't readily apply.
No state money needed. The last thing that legislators from rural areas (or anywhere else) want to hear is that the tax dollars of their constituents are being used to help Philadelphia. The sales tax increase comes from people who live, work, or visit the city. If people want to avoid the increased sales tax, all they have to do is avoid shopping here. Lawmakers might oppose raising taxes in their own districts, but why should they care about Philadelphia?
Philadelphia has already made budget cuts. One line of argument against raising the sales tax might be that our city government could do more belt tightening. One thing that seems to have been forgotten: Mayor Nutter and his team already cut $1 billion from the budget in the middle of the year and the plan passed by Council calls for about $500 million more. In fact, those cuts are the main reason that Nutter is seeking the sales tax increase in the first place. Since Philadelphia has made these cuts, we have earned the right to raise taxes.
Boost for suburban shopping. This was the argument made most recently by City Council President Anna Verna. It might not be the kind of thing a local elected official should say, but that doesn't make it any less true. The increase in the sales tax could help push big ticket purchases-- like cars or appliances-- into suburban counties. That might be bad for Philadelphia merchants, but it's good news for suburban retails who are suffering through the same recession. That could be music to the ears of state legislators who represent the areas immediately outside of Philadelphia.
What do you think? Are these compelling arguments for raising the sales tax?