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Pittsburgh’s Battle of the Drink Tax Rages On

2 min readBy: Mark Robyn

Business owners and activists in Allegheny County, Pennsylvania, which includes the Pittsburgh metro area, have been fighting the county’s controversial drink taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. for months. The 10% tax on drinks served in the county, along with a $2 per day car rental tax, was authorized last year with the purpose of providing $32 million annually in matching funds to Port Authority Transit, the company that provides mass transportation for the county. Groups like Friends Against Counterproductive Taxation (FACT) who oppose the drink tax had been working to get a referendum on last week’s election ballot. The referendum would have given voters the choice to reduce the drink tax significantly from 10% to 0.5%. Allegheny County officials responded by supporting a referendum that would have let voters choose to replace the drink tax with an increase in property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es.

Both referenda were removed from the ballot when the county election board ruled that the ballot measures violated state law by seeking to overrule county tax policies. The issue was taken to the state’s Supreme Court which received legal briefs in early October concerning both ballot questions, but the Court declined to issue a directive concerning the ballot measures in time for the election. FACT is still hopeful however, as the state’s Supreme Court has agreed to hear appeals on the two referenda.

At the same time, Allegheny County Chief Executive Dan Onorato has proposed in his 2009 budget to reduce the drink tax to 7% and use any extra revenue to fund local infrastructure projects. But this plan has also been controversial. The Legislative Reference Bureau, which writes laws for Pennsylvania’s General Assembly, allowed the county to use the drink tax revenue for design and engineering work, road and bridge work, and debt service “as long as the costs are solely related to transit systems.” But a disagreement exists over whether “transit systems” can include general road and bridge projects that are unrelated to mass transit systems.

Read more on the drink and car rental tax here, here and here.