Restaurateurs suing over tax

Friends Against Counterproductive Taxation is bringing out the big guns in its ongoing battle… Friends Against Counterproductive Taxation is bringing out the big guns in its ongoing battle against the drink tax.

FACT, along with other bar owners and bartenders, spoke out against Allegheny County Chief Executive Dan Onorato’s tax before it was even implemented at the beginning of January. Now they are determined to go all the way, even if that means suing the county.

In January, FACT filed an initial complaint with hope of obtaining a special injunction, an emergency court order that halts the collection and enforcement of a tax. The judge, however, said there was not enough evidence for the injunction.

FACT is working on filing an amended complaint to ask for a preliminary injunction wherein witnesses will give their testimony regarding the harmfulness of the tax.

“It’s a more elaborate proceeding,” said John Graf, an attorney and adviser to FACT. “We’re looking to have the tax declared unconstitutional and to permanently bar enforcement of its collection.”

FACT is also pushing for a referendum on the November ballot in hopes that it will rally more support, in addition to the 90,000 petition signatures it has already collected.

Graf, who also owns The Priory Hotel in the North Side, explained that the tax violates the Pennsylvania Constitution.

“There is a requirement in Pennsylvania that any law that is passed has to have in its title the purpose of the law,” Graf said.

Cris Hoel, FACT’s primary liquor attorney, added that the tax violates the state constitution because it does not treat alcohol of the same class equally. The tax is levied on beer sold in bars, for instance, but not beer sold by distributors.

“The lawsuit advances several legal claims that the tax is discriminatory,” Hoel said. “The tax situates people differently. The same customer can purchase a single pack of beer from two different sellers, and one is taxed and one is not.”

Robert Macey, a county council member who supported the drink tax, is a member of the Port Authority board. According to FACT, this is a conflict of interest as the tax’s purpose was to help bail the Port Authority out of an estimated $80 million deficit.

FACT has also suggested alternative ideas to replace the drink tax.

These solutions range from the legalization of video poker machines to the Regional Asset District tax. The RAD tax is the 1 percent additional sales tax in Allegheny County that funds the county’s cultural resources. It has a budget of about $77 million.

FACT suggests using the surplus of RAD funds to bolster the Port Authority’s deficit.

“There are plenty of proposed solutions in circulation,” Hoel said. “The trick is pushing one across the finish line.”

William Robinson, chairman of the council’s budget and finance committee, voted in favor of the drink tax from the beginning.

“We spent five months of hard work before a final vote on the drink tax and car rental tax,” Robinson said. “I supported both and have no regrets. I believe we will prevail.”

He explained that 2009 revenue sources were being examined, and there will be a deficit of approximately $30 million.

Graf believes it is the responsibility of the council to reconsider the drink tax it they ignored the wishes of the citizens.

“Ultimately, I think we’re going to prevail,” he said. “I think the people have spoken loudly and clearly that they don’t want this tax. Which falls first: the political angle or the lawsuit angle? We’re definitely pushing both fronts.”

Both Hoel and Graf are optimistic about the lawsuit and believe FACT will succeed in having the county repeal the tax.

Fourteen council members have already agreed to eliminate the tax in a 14 to 1 vote.

Hoel said that the lawsuit and referendum will increase in importance should county officials fail to follow through with this pledge.

“We only have to win once to eliminate the tax.”