Taxes Up in Second-Hand Smoke at Allentown's NIZ

Morning Call journalists Matt Assad and Scott Kraus, in their latest revelation about the NIZ biz, reveal a tax grab that goes way beyond mere EIT from outlying municipalities. Developers Joe Topper and J.B. Reilly, partners in Lehigh Gas Corp. and each of them $10,000 contributors to Allentown Mayor Edwin Pawlowski, now plan to divert tobacco tax, too!

According to the news account, Topper and Reilly made an offer to East Side Allentown cigarette wholesaler Dorward Wholesale, and are moving operations from there to the NIZ so they can take advantage of the $1.60 per pack tobacco tax, estimated to bring in a cool $7.2 million each year. That tax money will be diverted for their $50 million office complex.

Instead of the tobacco tax revenue going to fund state programs, it will be converted into building equity for J. B. Reilly and Joe Topper in City Center. Is this economic development or economic alchemy? This is an economic development shell game at best, and tax larceny at worst.

Senator Pat Browne, who now looks like the little Dutch boy trying to put his finger in the dike to stop the flooding, keeps telling us not to worry. The spokesman for Lehigh Gas, says this is a good thing for all of us and par for the course.

I feel better already.

We get no new businesses moving into the NIZ, just another one from another part of Allentown - its forgotten East Side. Worse than that, these guys have figured out a way to "game the NIZ." In fact it's the closest thing to the elusive concept of alchemy I have ever seen.

If Tom Corbett sits silently for this one, if the rest of the Lehigh Valley doesn't see what is really happening here, then we are all fools and deserve to have these thieves laugh all the way to the bank - literally and figuratively - since that is what 702 Hamilton was and is.

Irony has a funny way if being ... ironic.

The barbarians are at the gates and they will use this NIZ to get their buildings built for free. We haven't seen the end of it, since the waterfront development is still to happen. If you don't think that Mark Jaindl and his partners won't try to leverage the NIZ benefits to their advantage, then you haven't been out to the townships that his brother has devoured courtesy of public subsidy - new highways, new sewer lines and new water lines - and even more importantly, some of the most favorable rezoning this side of New Jersey.

Hey, here's an idea for old Topper and Reilly. Talk to tax collector Berkheimer about "relocating." They collect the per capita tax for a lot of school districts and EITs for a lot of municipalities (Bethlehem included).

The per cap tax for BASD alone probably is somewhere around $1 million.

I'm sure, with Berkheimer's massive staff, they'd need gobs of office space (maybe a couple thousand sq ft max). I think Reilly would have an attractive lease for them.

Let's not forget about the fact that you have Lehigh Gas' state gasoline taxes that are being used to build the new building, too. Assad and Kraus did a good job of projecting what this little wholesale tobacco and candy company would generate in state taxes, I am sure they could do the same for Lehigh Gas' taxes on gasoline sold.

This is truly an example of the "law of unintended consequences." I cannot believe that this scenario was envisioned when the legislation was discussed - even though it was with a very small group of decision makers - and that something like this would be condoned. I guarantee you that every wholesale tobacco outlet in the State - the low-hanging Lehigh Valley fruit will be picked first - is fair game for these two.

This is just incredible. Now, if they could just move the PLCB's "cage" in Harrisburg to the NIZ, they'd have a billion+ more in liquor taxes to play with.

"Sir, have you no shame?"

While Topper and Reilly have made sure they took care of themselves, let's see how Allentown has taken care of you. For that, you'lll need to read the post below.