Buy Philly, Pay More

Nutter's 19-percent property tax hike is out. A sales tax hike is in.

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    NEWSLETTERS

    TK
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    Abe's gonna be busier if Philly's sales tax goes up a penny on the dollar.

    Sales tax would go up one cent on the dollar if a budget compromise passes through Philadelphia City Council.

    The good news: Your property taxes are staying put.

    The bad news: You have to fork over eight-percent in tax on purchases made in the city.

    Philadelphia Mayor Michael Nutter wanted property tax increases, but met a compromise with City Council to instead temporarily hike the sales tax. Some council members were upset with the burden that increased property taxes would put on city homeowners.

    "We are pleased to report to the citizens of Philadelphia that we have reached an agreement on a joint budget proposal that embraces our collective values and minimizes pain to the residents of our city," said Nutter's office.

    The mayor had to do something to generate more cash for a city that faces a $1.4 billion five-year financial hole, according to Philly.com.

    The sales tax increase would take place over five years, according to mayor's office.

    The agreement is merely a step on the way to an increased sales tax. Council must still pass the budget proposal and then state lawmakers would have to approve raising the sales tax from seven to eight percent.

    The sales tax compromise eases the tax burden on some homeowners and instead dips into the pocketbook of every person who buys something in the city, including visitors. Sales tax hikes are generally seen by economists as regressive rather than progressive because they are harder on lower-income households.

    It must be asked how Philly businesses can stay competitive with an eight-percent sales tax against suburban merchants who only need to tack on six percent. A trip out of the city could save some big bucks for someone making a big purchase if the sales tax hike is passed.

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