It was a rainy, warm March back in 1936, and the snow in the hills around Johnstown began to melt. This caused the unfortunate city to be leveled by yet another flood. To help rebuild Johnstown, Pennsylvanians were forced to pay a temporary 10 percent tax on all wine and spirits.
The key word being "temporary."
Even though the town was back on its feet in a few years, the tax remains. And it now stands at a whopping 18 percent.
About the only joke bigger than a politician telling you that a tax will be temporary is the politician himself. And what a laughingstock Philadelphia Mayor Michael Nutter has become.
After two terms of John Street’s incompetence, expectations were high that Nutter would make the city shine again. Many thought the new mayor actually understood what it took to create a healthy business climate in Philadelphia.
Nothing could be further from the truth.
Underneath his monotonous, boring exterior lies a blazing liberal Democrat who believes increasing the power of government is the best way to solve problems. In other words, trampling on the backs of his overtaxed and over-regulated constituents.
You see, Mr. Nutter doesn’t have the guts to make the bold decisions required of a true leader. He won’t take on the special interests, refuses to cut wasteful spending, and has done nothing to rectify the bureaucratic black hole that is city government. Instead of making Philadelphia the economic engine it should be, Nutter has chosen to continue down the disastrous path of business-as-usual.
Because of a lack of both business acumen and courage, Nutter begged the state legislature and Gov. Rendell to bail him out of his fiscal jam. His solution to make Philadelphia prosperous? Tax, tax, tax.
He sought, and unfortunately will receive, the power to "temporarily" increase the city’s sales tax by 100 percent. Wow, that’s going to work wonders for making Philadelphia a desirable place to live, shop and do business.
Any short term gain will be offset by long term losses, and, categorically, there is absolutely no way the tax will be temporary.
The reality is that people will simply cross the city line to make their purchases, from TVs to refrigerators to washing machines. So not only will the city fail to realize the anticipated revenue of its tax increase, it will lose the sales tax in its entirety. But this isn’t just a Philadelphia issue. When people cross into New Jersey, or better yet, Delaware (where there is NO sales tax), Pennsylvania will lose its 6 percent. And more people will be incentivised to use the internet to shop, yet another way to avoid the tax.
When will elected leaders realize that you cannot tax your way out of a recession? Taxes never lead to prosperity. They simply result in people and businesses fleeing to a friendlier location.
But this obvious truth is lost on Philadelphia’s leaders.
Study after study show what the citizens of Philadelphia already know: that our great city is being devastated because of politicians who care more about themselves than the people they serve.
Philadelphia ranks as one of the least desirable places to locate. It levies some of the highest taxes of any city in the country. Its educational product is horrendous.
Between 2000 and 2007, Philadelphia lost 4.5% of its residents, the largest percentage drop of any Top 25 city. From 1990-2000, the City of Brotherly Love’s population losses were the third largest of the 243 cities with more than 100,000 people. Since 1970, the city has lost 265,000 jobs and 450,000 residents.
How many companies cross Philadelphia off their list of places to locate? We are out of the game before it even begins.
And where is the mighty Philadelphia Chamber of Commerce, who should be leading the charge against such suicidal polices? Nonexistent. Why? Two words: David Cohen.
As Chairman of the Chamber, and one of Gov. Rendell’s closest allies and biggest fundraisers, Cohen can be counted on to be the go-along, get-along guy. So much for a pro-business Chamber.
When does it end?
If the 73 year old liquor tax is any indication, not for a very long time.
Chris Freind, author of "Freindly Fire," is an independent columnist and investigative reporter whose home newspaper is The Philadelphia Bulletin. Readers hail from six continents, thirty countries, and all fifty states. He can be reached at [email protected]