Jun 8, 2015

Allentown's Success Based On Smoke And Dummies

J.B. Reilly and Joe Topper have purchased a cigarette distributorship and moved the business address to their 702 Hamilton Street address. This maneuver allows their company, City Center Own Allentown, to use the $1.60 per pack Pennsylvania cigarette tax toward the debt service on their growing empire. Perhaps this was the conflict of interest which propelled Reilly to resign his position on the hospital board. One would like to think that tobacco taxes are used for health care, not private enrichment.

UPDATE: The above is reprinted from February of 2012. The cigarette loophole proved enormously lucrative.  Instead of relying on employee taxes poached from other places in Lehigh Valley, the NIZ barons could now build more and more buildings, funded by smokers everywhere.  While originally building just for the poached businesses, it allowed the barons to start building on speculation.  The Jaindl Company,  now following that successful game plan, is also purchasing a cigarette wholesaler.  This means that instead of tenants waiting for completion,  we will have new empty buildings waiting for tenants.  It gets much worse if we use a moral compass.  The cigarette taxes had been used to fund CHIP,  children's health insurance, and other health related programs. A large portion of those funds now go to finance these privately owned real estate empires.  HOW DID THIS HAPPEN? In the last election for state representatives, seven of the eleven incumbents were unopposed.  They are, to a person, inept and complacent.  Of course, the dirt dumb voters also deserve credit.

13 comments:

Anonymous said...

Mike,

All good points and they provide excellent examples of the dangers/abuses/excesses of government involvement in development and commercial activity.

Scott Armstrong

Anonymous said...

The next aqwisition will be Cigar International that will have a 1800 number answering machine¿ Job created zero with a phone number generating money intake nationwide¿

redd
patent pending

michael molovinsky said...

my hunch is that the cigarette tax loophole was an unintended gift, by whoever was the brains behind pat browne's NIZ. it was turned into a windfall with no justification, creating no jobs whatsoever.

Anonymous said...

Interesting note about Cigar International, currently with 3 locations in Hamburg, Bethlehem and Bethlehem Twp. Its a big company with sales across the US and the World. I can guarantee you they are being courted, a local poach with huge tobacco tax potential, I'd bet they get an offer they can't refuse to move to NIZ.

michael molovinsky said...

@10:18, if they get an offer, it would be to purchase the business, assuming cigars fall under the cigarette tax. only the building's owner directly benefits from the NIZ, the state income taxes of the tenant's employees working there, or in this case, the cigarette tax if they own the wholesaler, can be used for the developer's debt service. this absurd incentive is what is driving the construction of these buildings, not tenant demand. with employees and their jobs, a disingenuous defense of the NIZ can be made; however, the cigarette tax loophole is indefensible.

Anonymous said...

I thought that sales taxes in the NIZ go to the developers as well, whether or not the developer owns the business that generates the tax?

doug_b said...

The Democrats here in Minnesota: A one-time tax on tobacco inventory brought in $30 million, more than enough to cover the state’s first bond payments on the $975 million new ­stadium.

Then they raised cigarette taxes $1.60 per pack. All this to finance the Vikings stadium.

Originally they were going to fund it through 'electronic pull tabs' They paid a consultant to tell them this would be a big revenue generator - it fell short of it's goal by over 90%.

michael molovinsky said...

anon@11:00, you may be right, however, in the topper/lehigh gas, he purchased the cigarette distributor. likewise, it's my understand that jaindl is considering the same.

Anonymous said...

I'm so sick of public money being used to finance sports stadiums here, there and everywhere.

It's gotten to the point where I hardly even want to watch or follow sports anymore.

Thanks for spoiling what used to be fun stuff, Big Government.

PS - If sports stadiums are so good for stimulating the local economy, what exactly IS the deal over on the East Side? This is the 8th season of AAA minor league baseball over at Coca-Cola (Taxpayer) Park. The IronPigs have been at or near the top of International League attendance each and every season since inception. But I'm still waiting to see signs of meaningful Economic Progress over on the East Side --- Why is that?

Could it be that Smith College economics professor Andrew Zimbalist always did know what he was talking about???

Anonymous said...

"This is the 8th season of AAA minor league baseball over at Coca-Cola (Taxpayer) Park. The IronPigs have been at or near the top of International League attendance each and every season since inception. But I'm still waiting to see signs of meaningful Economic Progress over on the East Side --- Why is that"

Anon 5:41: Hang in there, I wouldn't be suprised if the Riverfront Development along Front Street becomes a pre-game destination for Iron Pigs games with boat ferries across to a Coca Cola Park Landing with park shuttles or walking path.

michael molovinsky said...

anon@11:03, nothing in allentown is more than 12 minutes away from anywhere else, that is why we didn't have a fire station on the east side for years. your pre-destination vision isn't allentown, or it's patrons. don't stand there waiting for the boat ferry, you'll grow old.

Anonymous said...

If the State of Pennsylvania were to increase cigarette taxes would the additional cash go to Mayor Pawloski and Senator Browne.Whoever thought this scheme up deserves the benefits of the law.I thought the new Pennsylvania Governor was a friend of the people.

DreamingOfJustice said...

***snickering***

I really have nothing to add to this except: Lehigh Valley Live tossed me off it's comments pages.

That Is All.

Carry on.