PA businesses unhappy with tax increase

The increase in the sales tax in Philadelphia is likely to hurt merchants and residents alike.

The increase in the sales tax in Philadelphia is likely to hurt merchants and residents alike.

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[audio: 091012tmtax.mp3]

Philadelphia businesses are now collecting 8% sales tax as part of the effort to balance the city’s budget. Greg Bonner is a professor at Villanova University’s School of Business. He says the one percentage point increase will drive people out of Philadelphia to make major purchases.

Bonner: People who live near Delaware it just exacerbates their interest in going to Delaware where there is no sales tax. When you are at 1%, going to Delaware might not be worth the trip. When you are now up to an 8%, so not only is it bad for business, it’s bad for the people who live in Philadelphia.

Businesses aren’t very happy about the tax increase. The head of the Manayunk Development Association says they are going to have to offer more competitive pricing to offset the tax hike.