Forum: Stewards of whose economic growth?
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What is the future of Allegheny County when the stewards of economic growth, the lions of industry, advocate a position so harmful to small business development that its effects will reverberate for years?
This is the question begged by the Allegheny Conference on Community Development's recent pronouncement in favor of the 10 percent tax on poured alcoholic beverages and the $2 per day tax on rental cars proposed by Allegheny County Chief Executive Dan Onorato.
According to its Web site, the mission of the Allegheny Conference is to "stimulate economic growth and enhance the quality of life in Southwestern Pennsylvania." One of its member organizations, the Greater Pittsburgh Chamber of Commerce, is charged with "advocat[ing] business climate improvements to create an even more competitive regional environment for new and existing businesses . . . ."
The Allegheny Conference, however, has sadly undercut both of those missions by throwing the weight of its name in favor of the drink tax and rental car fee. The Allegheny Conference's position is both wrong on the facts and antithetical to the goal of making Allegheny County a place to start and grow small businesses. Even a cursory review of the facts bears this out.
(1) The Allegheny Conference is hypocritical in opposing some taxes and favoring the drink tax. The Allegheny Conference is a key member of an organization known as CompetePA. The purpose of CompetePA is to make Pennsylvania a more business-friendly state by rolling back taxes on corporations such as the stock franchise tax and the corporate net income tax -- taxes which fall, by the way, disproportionately on very large corporate concerns. The Greater Pittsburgh Chamber likewise lobbies tirelessly for the rollback of these taxes.
However, when a tax is proposed on Allegheny County business owners in the hospitality industry, the vast majority of whom are local small business operators, the Allegheny Conference is unconcerned. The conference enlists the help of small businesses when it is convenient to lobby against state corporate taxation, but when a tax is aimed at one industry in Allegheny County, its leaders don't just remain silent, they advocate a position actively hostile to those small businesses.
(2) The drink tax has nothing to do with the mass transit issue. Ostensibly, the Allegheny Conference favored the drink tax and rental car fee because it would provide a steady source of funding to mass transit in Allegheny County. This justification is not supported by the facts as presented by the county itself.
First, the state legislation enabling the imposition of the rental car fee and the drink tax requires only a 5 percent increase in county funding to the Port Authority to receive state matching funds. This amount is surely less than $2 million based upon the county's previous funding level of $25 million per year. The drink tax and rental car fees, though, are expected to raise at least $30 million. Where does the extra money go? Good question.
Both County Controller Mark Flaherty and County Manager James Flynn have stated in testimony to County Council that Allegheny County has operated with a systemic budget deficit for years, ranging from $15 million to approximately $30 million this year.
The drink tax is needed not for funding public transportation but to fund general county operations. The Allegheny Conference, however, has made no mention of this in its position paper and did not bother to take it into account when it issued its public proclamation.
(3) The Allegheny Conference's position is already reaping real negative effects. Proponents of the drink tax and rental car fee are holding out the endorsement of the Allegheny Conference as an endorsement by the business community at large.
Nothing could be further from the truth. Businesses know that any tax directed at one industry -- especially in Allegheny County, where consumers can easily cross county borders -- will stifle business development and cause a loss of jobs. According to an article in the Post-Gazette, Philadelphia, since it enacted a similar tax in 1994, has lost 150 liquor licenses. This loss equals closed businesses and lost jobs.
Allegheny County can expect worse, given the high growth rates of and ease of access to adjoining counties. If the drink tax is imposed, you can be assured that small businesses will close, people will lose jobs and prospective business owners will look to more fertile business climates (say Cranberry Township).
I am the president of the North Side/North Shore Chamber of Commerce. We are in favor of lowering government-imposed impediments to the development of businesses, large and small. We are in favor of creating an environment of letting entrepreneurs create their businesses without onerous taxes directed at one industry. The drink tax and rental car fee do exactly the opposite: the message to business is "do not locate in Allegheny County; go elsewhere."
Why the Allegheny Conference, purported champion of free enterprise and low taxes, cannot see that is a mystery.
First Published November 18, 2007 12:00 am