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As grumbling peaked last month over Philly’s bumper crop of seasonal potholes, Mayor Cherelle Parker proposed creating six new “pothole squads” to proactively patch damaged roads — along with a new tax to pay for them.
“Somebody’s going to say, ‘Did you just get all excited about potholes?’” Parker exclaimed during her annual budget speech, to cheers and applause. “And what I’m going to say is that, until you’ve had to go and get your shocks or your car serviced because you hit a pothole, you don’t know how serious an issue this is in the city of Philadelphia.”
To bump up the Street Department’s road-maintenance budget by $15 million, including $7 million to hire 24 people and buy equipment and supplies, the mayor proposed a new 25-cent tax on retail deliveries.
Food, medical supplies, baby products and wholesale goods would be exempt, as would retailers outside Philly that get few orders here. But the law would still require a multitude of companies — Amazon, Instacart, Walmart, GoPuff, Pets.com, the Rubber Chicken Shop (if they get enough orders) and countless others — to pay the city a quarter every time a package containing any covered item is dropped off at a home or business.
The proposal got buried under the furor over two other new business taxes she has proposed — a $1-per-trip tax on Uber and Lyft to raise money for the school district, and a higher hotel tax to support homeless shelters that would require action by the state legislature.
But the retail delivery tax is attracting opposition as well, including from a national e-commerce industry group that has used an affordability argument to successfully lobby against similar “doorstep taxes” across the country. Only two such levies currently exist, in Colorado and Montana.
“There is going to be a lot of opposition and a lot of meaningful conversation,” said Brianna January of the Virginia-based Chamber of Progress, which is funded by Amazon, Google, and other big companies, and plans to lobby against Parker’s proposal. “Folks are having conversations both directly with legislators and with the mayor’s office, but also in the public forum.”
A big year for potholes
While potholes are a perennial problem in Philadelphia, this year’s harsh weather has made them particularly evident, as residents have enthusiastically documented on social media. Recent highlights include a huge hole in Kensington that reportedly “swallowed” a Water Department truck and a “crater-sized” pothole in Grays Ferry that damaged multiple cars.
“We had a brutally cold winter and back-to-back winter weather events of snow and ice and rain and sleet,” Streets Commissioner Kristin Del Rossi told Billy Penn. “That freeze-thaw process really does a number on the roadways, and that’s why you see so many potholes at this point in time in the year.”
In 2025, the city filled over 50,000 potholes, according to budget documents. Meanwhile, in just the first two and a half months of 2026, more than 21,000 have been repaired, Del Rossi said.
Potholes and street damage generally are one of the top issues residents want addressed, according to feedback received at the city’s Neighborhood Community Action Centers. In the administration’s proposed budget for the next fiscal year, it responded with the proposal to create the new “pothole posses” or squads.
The goal is to create a new crew in each of the Street Department’s six highway districts that will spend part of its time scouring the roads for new holes and fixing them, rather than primarily responding to 311 calls about the defects, Del Rossi said. The squads would patch about 15,000 holes a year.
“Think about the pothole squad as a way for us to try to be proactive instead of reactive,” Parker said during her March 12 budget address in City Hall’s council chambers. “And if you like those residential street cleaning teams, members of City Council, I think you’re going to love the pothole squad. Give it up for the pothole squad.”
Learning from Colorado
The Parker administration has generally moved in the direction of gradually reducing taxes on Philadelphia companies, in an effort to boost business creation and employment.
Now, however, to help fund some of her priorities, the mayor is proposing new taxes on firms that aren’t necessarily based in the city. That includes retailers that do deliveries, Uber and Lyft, and online businesses generally, which would be required to start charging their Philly customers the city’s 2% sales tax.
The retail delivery tax “was chosen because it ties the use of the funds — improvements to roads — to activities that have an impact on road conditions (delivery vehicles),” Finance Director Rob Dubow said in an email. “While this approach is still relatively new, we’re seeing more jurisdictions explore it as delivery activity increases.”
“Delivery traffic has grown significantly, and this ensures we can maintain infrastructure without raising broad-based taxes,” he said.
The proposal was shaped in part by studying the statewide delivery fees in Colorado and Minnesota, Dubow said.
In 2021, Colorado established a 27-cent fee pinned to inflation that has since risen to 28 cents. It exempts businesses with less than $500,000 in sales the previous year. The fee initially generated about $76 million a year, in part for “clean transportation” projects, according to a summary by CSG Midwest, a state policy think tank.
Minnesota’s fee of 50 cents per delivery or transaction excludes business with less than $1 million in sales, and exempts deliveries of drugs, medical devices, food, and baby products, as Philadelphia’s tax would. It was first levied in 2024 and was projected to collect $59 million a year, with revenue mostly distributed to municipalities.
In both states, measures have been introduced to eliminate the fees or create new exemptions, but none have passed.
Fee proposals have been studied or debated by lawmakers in several other jurisdictions. A PennDOT advisory committee said last year that Pennsylvania policymakers “should consider a package delivery fee to fund needed transportation infrastructure,” but legislators have not taken up the suggestion.
“New York City and state have failed several times” to pass delivery fee legislation, as have Boston and the state of Massachusetts, said January, the Chamber of Progress’s director of government relations for the Northeast. “Connecticut has considered several times. Vermont, Rhode Island, Indiana, and Maine as well, I believe.”
Virginia’s legislature recently discussed but did not pass multiple proposals, and Maryland lawmakers considered proposals for three years in a row before dropping the idea, she said. Legislators in Hawaii and Mississippi have also proposed instituting delivery fees.
Industry teams up with disabled advocates
January said her organization has sent information packets opposing Philadelphia’s proposed tax to the Parker administration, councilmembers and state legislators, and plans to lobby against it as budget discussions continue over the next two months.
The packet cites a January 2025 poll the Chamber of Progress commissioned that found 80% opposition to delivery fees among Pennsylvania residents. The figure rose slightly when those surveyed were informed “about criticism of the fee.” Subsequent polls in December found 53% opposition among Colorado residents and 48% opposition in Minnesota.
An analysis the Chamber of Progress commissioned argues that the fees disproportionately harm small businesses, impact jobs and wages, create burdens on consumers who end up being charged more for their purchases, and constitute a “regressive tax” on disadvantaged households.
“Our concern is really the impact to marginalized communities that rely on delivery for essentials. Folks that are disabled, the elderly, folks that are on fixed income, that have no other choice but to use delivery services because they can’t get to the stores frequently,” January said. “This is a direct impact to their bottom line.”
In Maryland and other places, her organization has teamed up with advocates for people with disabilities to argue against creating the new taxes, she said.
Dubow argued that concerns about reduced employment or harm to consumers were overblown.
“At a quarter a delivery, we don’t believe it will have a meaningful impact on the number of deliveries,” he said. “We also were intentional about exempting items like food, medical supplies, and baby products to reduce the burden of the tax.”
Questions about tax administration
Sentiment in Philadelphia toward Parker’s proposal is unclear, in part perhaps because the idea is new and has been overshadowed by the debate over the rideshare tax.
Disability Rights PA and AARP’s Pennsylvania office said they were unfamiliar with the proposal. A spokesperson for the Chamber of Commerce for Greater Philadelphia said the organization is still reviewing the tax and declined to comment. The Pennsylvania Chamber of Commerce and Industry did not respond to a query.
Lauren Alden, a director at the Philadelphia advocacy group Liberty Resources, was concerned about the tax’s potential impact on the city’s nearly quarter-million residents with disabilities, “many of whom rely on delivery services because transportation barriers, inaccessible stores, or health conditions make in-person shopping difficult,” she said. “For these residents, delivery is often a necessity rather than a convenience.”
The group encourages the city to add safeguards so the fee doesn’t make it harder for people to live independently, such as exemptions for people with disabilities, she said.
City Council has so far only briefly discussed the measure. During a hearing Wednesday, Councilmember Jim Harrity said the city should do more to make contractors fix their own road cuts and trenches rather than leaving it to the city to fund repairs, and said he was worried about businesses wrongly charging customers even for exempt deliveries.
“There needs to be some checks and balances there, because if they could find a way to get over by throwing that fee on there, even though it’s exempt, some of these bad actors will throw the fee,” he said.
Councilmember Jamie Gauthier asked about Instacart deliveries that include both taxable and exempt items, such as groceries, and asked why the city couldn’t exempt such mixed deliveries from the tax.
“We’d probably see a lot of orders that just add a non-taxable [item] so that people didn’t have to pay,” Dubow said. “‘Let’s find a non-taxable thing to throw in.’”
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