Dan “the Dictator” Onorato seems to be becoming completely unhinged by his latest court setback, when a judge declared illegal his plan to siphon away Drink Tax revenues from the Port Authority for his pet projects.   It seems that he has now taken to writing letters to the Post-Gazette in response to letters written by just plain old citizens.  You’d hope he’d answer letters directed to him as County Diminutive as quickly and in such detail, but that is certainly too much to ask.   http://www.post-gazette.com/pg/09009/940598-35.stm

The Post-Gazette, one of America’s Great, Most Spendiferous Newspapers, earlier this week ran an article detailing how some taverns have not lowered their drink prices (for simplicity, many bars include the tax in the price of the drink) despite the lowering of the Drink Tax from 10 to 7 percent.   http://www.post-gazette.com/pg/09006/939857-85.stm

Putting aside the fact that this story comes right out of the Dictator Dan/ Rich Fitzgerald/ Kevin Evanto talking points, the story features a gaping hole in its reporting.  

The Sports and Exhibition Authority is a joint County-City authority.  The SEA owns PNC Park, Heinz Field, and Mellon Arena.  The SEA contracts with Aramark, a Philadelphia company, to sell concessions at those public arenas.  When the Drink Tax went into effect, Aramark rather notoriously raised its beer prices in excess of 10% in order to “round up” to the nearest quarter in order to keep its transactions simple.  Thus a beer that cost $6.50 pre-tax went up to $7.25 — an 11.5% increase (the price would have been $7.15 with the tax at 10%). 

 Now with the tax at 7%, Aramark could easily lower beer prices by a quarter and not feel any ill effects on its margins.  3% of $7.50 is 22 cents.  Since the beer price was raised by an extra dime in the first place, Aramark is still overcharging for the tax if the price was reduced to $7.25. 

But the P-G never asked that question.  And thus the County Diminutive has never answered, ”Why doesn’t the County instruct its authority to instruct Aramark to lower its prices?”  Why wasn’t the question asked?  Who knows?  Dan hasn’t answered it because he would rather have the press pick on Mom and Pop bar owners than corporate fat cats like Aramark who stand to make an extra $25,000 per Steeler game leaving their pricing in place. 

The Post-Gazette, one of America’s Super Great, Unbelievably Keen, Indescribably Superlative Newspapers, has been on the wrong side of the Drink Tax issue from the start.  No surprise there, given the axis between Dan “the Dictator” Onorato to the Post-Gazette editorial page to the Allegheny Conference.

A few days ago, the P-G editorial page for once got it right when it criticized Il Duce for trying to grab Drink Tax revenues for general County pork spending.

Then, just when you thought it was safe to read the P-G, Editorial Page Editor Tom Waseleski comes out with this little bit of ill-reasonsed dribble on his blog:

“Tom Waseleski”

“The never-ending skirmish over the drink tax in Allegheny County is fraught with ironies.  One is that the tavern owners, restaurant operators and Republican County Council member who sued to ensure that every dollar of the tax went to public transit weren’t actually concerned about funding the Port Authority. They wanted to torture Dan Onorato, the county executive who initiated the tax. And they did, up to a point. . .

The latest irony comes in words from Kevin Joyce, owner of The Carlton restaurant and a stalwart opponent of the drink tax. . . .   The county cut the tax rate to 7 percent for 2009 after seeing that it generated more revenue last year than needed. What’s startling — or maybe not surprising — is that after a year of hammering away at the county for over-taxing taverns and restaurants, Joyce rationalized in today’s PG about the same establishments over-taxing their customers by not reducing drink prices after the tax rollback.

Joyce said, “A good case could be made for bar owners hanging on. There’s never been a tougher year than 2008 for the hospitality industry. From the drink tax, to the increased costs, then demand decreased, and then in the fourth quarter, the economy crashed and people weren’t spending as much disposable income.”

It’s true Joyce is in a tough business. So is anyone in government. Onorato feels his pain.”

Tom:  I’ll go through this slow so that you’ll understand.

Bars and restaurants are private businesses.  They can charge whatever price they want.   If customers think those prices are too high, or think that they’re being taken advantage of, they can and will go elsewhere.   The bar or restaurant will suffer diminished sales as a result.  People have a choice in this private transaction.

Allegheny County is a governmental entity.  It uses its taxing power to coerce customers and businesses owners into paying a percentage of each retail drink transaction to it in the form of the Drink Tax.  Unlike with a private business, the customer has not choice.  If he wants the drink, he pays the tax.  In the meantime, the County takes its cut without investing anything into the process and without taking any risk.  All it does is reap the reward when the transaction is completed.   If the tax causes prices to rise to the point where demand suffers, too bad.  Pay up.