Video  by Monica Sellecchia

The City of Philadelphia needs to reduce its spending and/or raise taxes by $1.4 billion over the next five years. This is because the global recession has slowed business activity so much, that future tax revenues are expected to come in much lower than expected.

Earlier this month, Mayor Michael Nutter proposed a new spending plan that would eliminate this huge spending gap, and part of his plan calls for a temporary three-year sales tax hike in Philadelphia.  Over that period, the city expects it would get an additional $341,705,000

Click image for LARGER graph

A number of items are exempt under Philadelphia’s sales tax. The city is required to use the same exemptions by the state. They include: Grocery store food, Clothes, Coffins and school text books. If you want to see the complete list click here.

The proposed 1 percent sales tax hike in Philadelphia is NOT a done deal. The Philadelphia City Council must approve this, and then the Pennsylvania State Legislature must approve the change as well. Governor Ed Rendell does support this, in fact, he supports allowing all counties to raise their sales tax rates by 1 percent.

So, what do you think? Should Philadelphia raise its sales tax to 8 percent? Do you believe Mayor Nutter when he says it’s only a “temporary” tax? If paying a higher sales tax rate, prevents budget cuts in libraries, fire and police, does that make you more willing to support the tax hike?