Hi, I’m Gene Barr, president of the Pennsylvania Chamber.
Welcome to this month’s Pennsylvania Chamber Minute.
On behalf of our broad-based membership, the Pennsylvania Chamber regularly warns lawmakers of the unintended consequences of government mandates. For example, to counter some elected officials’ effort to increase the minimum wage, we present fact-based evidence that these mandates lead to job loss and fewer opportunities for the very same people they’re supposed to help.
Along these same lines, we also routinely fight back against government efforts to target individual industries for higher taxes to pay for increased spending. One instance is in the governor’s repeated call for another severance tax on the natural gas industry. A second glaring example is currently happening at the local level. Two years ago, the city of Philadelphia enacted an unpopular tax on various beverages, supposedly to pay for early education programs. The so-called “soda tax” was met with strong opposition from the start by various business groups – including food merchants and beverage distributors - who argued that it would lead to higher prices for consumers and a loss of business for employers.
Those fears have since rung true. As 2019 began, the owner of a West Philadelphia Shop Rite that is only blocks from the city line hung a large banner at the front of his store announcing that location would be closing in mid-March as a direct result of the Philadelphia beverage tax. When asked by the local media why he would blame one tax for the store’s demise, Shop Rite owner Jeff Brown simply stated that the store’s location close to the city line has led customers to head a few blocks in a different direction for less expensive products since the tax took effect. The result has been a 23 percent loss in sales, which has made the store unprofitable. Unfortunately, some tax and spend proponents often don’t care to recognize the correlation between taxes and economic growth. Philadelphia Mayor Jim Kenney, who orchestrated the tax, has since said that Brown and other soda tax opponents really can’t “prove” that the tax is to blame, despite the decline in store revenue telling the story. Adding insult to injury is the fact that, according to the city controller, much of the money that’s been generated from the tax hasn’t been appropriated toward early education but is instead sitting in the city’s all-purpose General Fund.
This story is one of many in terms of what can happen when governments target one particular industry for higher taxes without consideration to the consequences. As the Pennsylvania Chamber shares these real-world scenarios with lawmakers, we aim to impress upon them the need for a business climate that encourages, rather than hampers, employers’ efforts to invest, create jobs and grow the state’s economy.
Thanks for spending a minute of your time with the Pennsylvania Chamber, the Statewide Voice of Business.