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City Council Testimony June 6, 2013

Hello everyone, I am John Longacre. I represent the Philadelphia Licensed Beverage Association in coordination with the PA Licensed Beverage association, which is comprised of responsible Philadelphia business owners licensed by the state to sell alcohol.

In Philadelphia we pay:
Wage Tax @ 3.928%,
Business Income Receipt Tax = 6.45% on taxable net income (Net Profit Tax),
Gross Receipts – .01415 %,
Sales Tax is 2% sur-tax over the State’s 6% = 8%,
Across the bar tax 10%,
Hotel Tax,
Tobacco Tax,
Liquor Tax,
Use & Occupancy Tax $5.51 per sq ft of assessed value,
School Income Tax,
Amusement Tax,
Mechanical Amusement Tax,
Parking Tax ,
Valet Parking Tax,
Vehicle Rental Tax,
Outdoor Advertising Tax,
My own personal favorite,………The Philadelphia Parking Authority Tax………

These are just a few examples of Philadelphia based taxes that we pay and in several instances do not exist among our suburban metro counterparts.

In March, national media outlets including the likes of Market Watch, the Wall Street Journal and the Huffington Post released reports that indicate Philadelphia residents carry the 2nd highest tax burden of any city in the Unites States of America.

In addition,
The Mayor’s new AVI initiative, while absolutely necessary will raise taxes on the majority residential property within the city, all while the city has raised property taxes six consecutive years.

Obviously we have a fundamental problem at the core of our City Government. When a city consistently runs out of money to operate itself, and has to continuously raise taxes on its businesses and residents alike,……..there is a problem at the core.

The city faced challenging economic times in 1994 when City Council approved the first across the bar tax at 10%. Now in 2013 the city faces yet another funding gap and the city is proposing an increase on an industry that is already being penalized. In addition, the already existing across the bar tax we pay in Philadelphia, does not exist in any of or PA, NJ or DE neighbors.

It’s almost as if the city government wants to punish the people and businesses who actually pay taxes, and reward the tax evaders. In the end we will be back here next year having this same fight unless someone in this room has the will and the skill to fix the problem. The city of Philadelphia is sitting on a gold mine of uncollected taxes, and it’s time for the city to dig deep and extract that gold.

As an industry, we all understand the Philadelphia Schools need more funding. None of us in this room are suggesting the Philadelphia Schools should not be properly and adequately funded. What we are opposed to is the creation of yet another penalty quick fix tax increase on the backs of small business without addressing the true, rotting festering problem that exists at the core of this cities government.

One has to wonder how a city starved for cash, that is owed over half a billion dollars in delinquent taxes could possibly be so permissive tolerating chronic delinquency on a scale that is unheard of in other major cities across America. How is it possible that a city with the aforementioned dynamic could possibly suggest another penalty tax on the backs of its residents and businesses without collecting the revenue already sitting on its books?

It would be unheard of for a privately held business or even another Northeast Corridor City, to have a delinquent portfolio of this magnitude on its books.

When Michael Nutter ran for Mayor his message was clear. As a supporter, I listened to him deliver the same message time and time again. He stressed that this city can and will solve all its financial problems with its existing assets. He stressed what it would take most of all was political will. He stressed the city could fix its ills without continuing to write “Path of Least Resistance” legislation.

I was inspired by that Councilman now Mayor.

We humbly and respectfully ask each member of Council, to summon the political will to fix this cities school funding gap without walking down the path of least resistance…….

Thank you.

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