Kenney, Clarke Denounce Proposal to Replace Philly’s Soda Tax

“Hiking our sales tax is simply not an option for the city,” the officials wrote to members of Pennsylvania’s General Assembly.

city council, mayor kenney, budget proposal

L: Mayor Jim Kenney | R: City Council President Darrell Clarke

With lawmakers in Harrisburg busy discussing options to eliminate Philadelphia’s tax on soda and other sugary beverages, Mayor Kenney and City Council President Darrell Clarke took steps this week to ensure that the state legislature considers their own two cents in the debate. (Or in this particular case, should it be their own 1.5 cents?)

On Monday, Kenney and Clarke penned a letter to members of the Pennsylvania General Assembly in which they jointly expressed their opposition to House Bill 2241, which would effectively cut the soda tax in favor of increasing the percentage of sales tax collected in the city. If approved, the bill would authorize a hike in Philly’s Sales and Use tax from 2 percent to 2.5 percent — which would then be added on top of Pennsylvania’s 6 percent state sales tax for a grand total of 8.5 percent — in an effort to generate the same revenue promised by the soda tax.

But Kenney and Clarke have each balked at the state’s proposal, which their letter stated is “simply not an option for the city.” The officials point to the fact that Philadelphia’s sales tax is already substantially higher than that in its suburban neighbors. Bucks, Delaware, and Montgomery counties are only subject to the standard 6 percent sales tax, while New Jersey residents pay just a 6.625 percent tax on goods and services.

“This new tax would have the devastating impact on the retail industry that the beverage lobbyists now claim is caused by the PBT (Philadelphia Beverage Tax),” Kenney and Clarke said. “The increased tax would drive individuals over the city border to purchase goods and would have a serious negative impact on the city’s retail and hospitality sectors, whose recent gains would be eliminated.”

In addition, both officials claim that raising Philly’s sales tax would actually end up having a negative impact on sales tax revenue as a whole. Their contention is that the hike would be “likely to produce diminished revenue and would force the [Kenney] administration and City Council to choose between ensuring long-term funding for employee retirement, or funding such essential programs as PHLPreK, Community Schools or Rebuild.” Since the soda tax went into effect in January 2017, Kenney and Clarke say, the city’s sales tax revenue has actually increased from $290 million to $324 million.

“We know the beverage industry has been lobbying hard to persuade members of the General Assembly to eliminate Philadelphia’s authority to impose the Philadelphia Beverage Tax,” the letter states. “We hope the General Assembly will reject that course of action. We are convinced that replacing this carefully constructed tax with the authority to enact a regressive sales tax hike would be devastating to the City. We cannot in good conscience support raising our sales tax even if authorized to do so.”

You can read the full text of Kenney and Clarke’s letter to Harrisburg below.

Letter From Mayor Kenney and Council President Clarke on Sales Tax by PhiladelphiaMagazine on Scribd