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City considers hiking liquor-drink tax to 15 percent

Increasing the "liquor-by-the-drink" tax to help provide $60 million for the schools seems to be gaining traction.

City Council President Darrell Clarke with Avenue North in the background. Clarke has pledged support for increasing the “liquor-by-the-drink” tax.
City Council President Darrell Clarke with Avenue North in the background. Clarke has pledged support for increasing the “liquor-by-the-drink” tax.Read moreRON TARVER / Staff Photographer

NEED A REASON to drink? How about improving the futures of Philadelphia's schoolkids?

Mayor Nutter and City Council are rarely on the same page these days, but the possibility of increasing the "liquor-by-the-drink" tax to help pay for the School Reform Commission's request for $60 million seems to be gaining traction on both sides.

City Council President Darrell Clarke has pledged support for increasing the tax, which now adds 10 percent to your bar tab (on top of the sales tax) and sends it to the schools.

The possibility of increasing the tax by half (to 15 percent per drink) has been floated.

In 1994, then-Councilman Nutter voted in favor of creating the tax, which now brings in more than $45 million per year.

"President Clarke and I have talked about that and I am certainly interested in that kind of proposal, but my track record on that one is pretty clear," Nutter said. The 1994 bill "was a tough vote for a lot of folks but I thought it was the right thing to do then and it's certainly something that we should explore now."

Clarke spokeswoman Jane Roh wrote in an email that the Council president "supports increasing this tax to bolster an annualized revenue stream for the schools."

Pat Conway, president of the Pennsylvania Restaurant and Lodging Association, said that while businesses don't like the tax, it's the customers who usually absorb its cost.

"It would be a tough pill to swallow for restaurants and taverns and for the entire hospitality industry, but it's actually more of a consumer issue," Conway said.

Increasing the tax is no silver-bullet cocktail shaker for fully funding the schools' request, so Council and the mayor would have to find money in other places to reach the $60 million the schools say they need to plug their enormous budget gap.

Nutter supports funding the request but has been elusive as to how he wants to get that done. On Thursday he addressed criticism that his administration hasn't yet presented a plan, saying he wants to first develop one with Council.

"We don't have a plan today and we certainly don't have all the answers today, and we don't have to have a plan and all the answers today. Our budget process, at least under the charter, is completed by the end of May," he said.

Some in Council, including Clarke, have not committed to providing the full $60 million, arguing that after two years of city property-tax hikes for the schools, it's Harrisburg's turn.

Nutter, however, said Thursday that he thinks Philly needs to show its commitment first to get more money out of the state.

"It would put us at that much worse of a situation from a discussion or negotiation standpoint to somehow seek additional funding from the Commonwealth of Pennsylvania . . . while some might suggest that the city would not be putting dollars on the table," he said. "I have to reject that kind of strategy."

CORRECTION: Due to an editing error, an earlier version of this story erroneously stated that Mayor Nutter supports increasing the liquor tax from 10 percent to 15 percent. Nutter said he wanted to discuss a possible increase but did not specify a rate.