Impact of inflation starting to show in Philly revenue report
Economic signs show the start of inflation’s impact on city revenue sources, including sales tax and beverage tax.
The September collections reports shows overall Philly revenue was up compared to a year ago, but some economic indicators show cause for concern.
Tax collections are up 8% in September compared to a year ago, but critical indicators like sales tax and beverage tax have dropped.
“When you see the sales tax dip you can correlate that to inflation because people are paying more for necessary items so there will be less to buy things they don’t need at this time,” said Harvey Rice, who heads up the Pennsylvania Intergovernmental Cooperation Authority.
The city collected approximately $230.2 million in General Fund tax revenue in September compared to $213.6 million in September of FY2022, an increase of or 7.7% according to preliminary collections figures.
The real estate transfer tax is also down in the city. “With interest rates increasing we’ve noticed that sales of homes are starting to dip a little bit,” Rice said.
However, there is some good news: Five of the nine General Fund tax categories saw increases in September compared to a year ago, including the business income and receipts tax, real estate realty transfer, parking, and other miscellaneous taxes.
Four categories saw decreases, including the city’s portion of the wage, earnings, and net profits taxes, sales taxes and amusement tax along with the beverage tax, which Rice said could be the result of people changing their habits due to the tax on sugar-sweetened beverages.
With the Phillies hosting more home playoff games, that means more amusement tax and beverage tax revenues are expected in the city coffers.
Get daily updates from WHYY News!
WHYY is your source for fact-based, in-depth journalism and information. As a nonprofit organization, we rely on financial support from readers like you. Please give today.