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25 August 2009 - Urgent ** ACTION ITEM **
This is an urgent Action Item that needs your immediate attention. Please read this Update and forward it to as many folks as possible.
First, let me begin with a disclaimer as a preface to today’s Update. This Update is not about the current Pennsylvania budget battle, an issue on which the PTCC and PCTA have not taken a position. Further, it is not meant to attack any political party but, rather, to point out the facts as they exist.
On Monday, August 24, House Minority Leader Representative Sam Smith issued a statement about the budget fight. I have excerpted the portions of the statement that are relative to school property tax elimination:
HARRISBURG – The following is a statement from House Republican Leader Sam Smith (R-Jefferson County) regarding the Sales and Use Tax expansion proposal being offered by the governor as a means to fund his bloated state spending proposal ...
... “Last week, Democrats were looking to tax legal services and limit access to the courts”.
“Now, we learn ‘everything is on the table,’ and they have a list of items, including many other ‘services’ they are looking to tax for more revenues – including each and every ATM transaction”.
“Newspapers and magazines; movie, sports and theater tickets; museums, historic sites and the zoo will all have the state Sales and Use Tax added to their costs just to increase state spending. Research and development, advertising, and administrative services will be taxed under the governor’s plan. In order to pay for big government services, Democrats are even looking to tax Unemployment Compensation Claims, mass transit, textbooks, flags and dry cleaning"...
From the Harrisburg Patriot-News, August 24, 2009:
… Republican negotiators have also rejected an increase in the sales tax, but left the door open for raising money by applying the sales tax to more types of items.
Rendell said Monday he was mystified by some of the existing exemptions, such as on sales of gold bullion and certain cable television charges.
"A lot of the exceptions make no sense and are solely the product of effective lobbying by special interests," he said, adding that food and clothing should remain exempt …
The proposal to expand the base of the sales tax poses a direct and immediate threat to the future of the School Property Tax Elimination Act (SPTEA). Since the SPTEA’s primary funding source is the expansion of the sales tax base, expanding the base for use in the general fund would wipe out the SPTEA’s funding and effectively kill the SPTEA forever. If we are to continue to work for school property tax elimination it is urgent that this proposal is stopped NOW!
** ACTION ITEM **
Since the Senate Republican negotiators are basically controlling the budget deliberations at this point, they are the lawmakers who have the best probability of stopping the proposed sales tax expansion. Therefore, it is imperative that you contact them as soon as possible to demand that an expansion of the sales tax base be removed from the table for this purpose. Please note the phrase “for this purpose”. If you give them the idea that you object to an expansion of the sales tax base for any reason it could come back to haunt us later during SPTEA debate.
Please voice your displeasure to the Senate leaders listed below as well as to your own Senator and Representative. Your lawmakers’ contact information can be found here by ZIP+4.
Senate President Pro Tempore:
Senator Joseph Scarnati
Senate Box 203025
Harrisburg, PA 17120-3025
Senate Majority Leader:
Senator Dominic Pileggi
Senate Box 203009
Harrisburg, PA 17120-3009
Senate Appropriations Committee Chairman:
Senator Jake Corman
Senate Box 203034
Harrisburg, PA 17120-3034
I cannot overemphasize the urgency of this Action Item. If the plan to expand the sales tax base for general fund purposes succeeds, we will have seen the demise of the School Property Tax Elimination Act. Please act on this today and forward this e-mail to as many folks as possible!
Thank you in advance for all of your help and support.
P.S. For those of you who want to see the hypocrisy that has been demonstrated on this issue, please read the quotes below. Almost all are comments from the debate on the SPTEA in January 2008 that I have extracted from the House Legislative Journal and most are by the Democrats who now support the expansion of the sales tax base. They fought against the sales tax expansion for the elimination of property taxes - which would have benefited everyone - but now they seem to think it's the perfect solution to pay for their general fund budget.
This is rather lengthy and adds nothing to the Update above, so if you haven’t the time or inclination it is not necessary for you to read it. It is FYI only.
Current quote from Rep. David Levdansky, House Finance Committee Chair, as published in the August 16, 2009 edition of the Scranton Times:
"Rep. David Levdansky, D-39, Elizabeth, chairman of the House Finance Committee, said a sales tax expansion could generate several hundred million dollars of new tax revenues annually. He wants to make the implementation of the sales tax fairer by ending some exemptions."
House Legislative Journal January 28, 2008:
Mr. LEVDANSKY. Thank you, Mr. Speaker.
... I think Representative Rohrer has it all backwards. If you want to broaden the sales tax to include all these services, then do that, but the reality is, the way it would be applied is extraordinarily unfair, and I am not saying that I am for expansion of the sales tax. I am not, but if one thinks that that is the right thing to do, this is the wrong way and the unfair way to do it ...
... For example, when you go to the MAC (money access center) machine
and you take out a couple hundred dollars cash. You know, I could remember
$200, you know, because if I do not carry my checkbook with me and I take
money out of the MAC machine, I could remember taking $200 out, and I
know the service charge is $2. So I could remember to take $200 —
tomorrow when I am pulling out my checkbook at the grocery store, I remember
to take out $202, but under this amendment, sales tax is going to be applied
to that service charge. So now I have got to remember, you know, how much
I took out and not just that but what the service charge is and now I
have to apply the sales tax to the service, to the service charge at the
ATM machine (automated teller machine) ...
Continued Page 187:
... When you are trying to subject goods and services that have never been subject to the sales tax, when you are trying for the first time to apply the sales tax on that, you are not exactly certain as to how much revenue that is going to generate because these things have never been taxed before ...
... Mr. Speaker, the other thing we have not looked at is what impact this amendment would have on the State's economy. Taxing things that have never been subject to the tax, raising the State personal income tax by 25 percent – those things are going to have a dramatic consequence in terms of our State's economy, and it is unpredictable at this point. It is a shot in the dark.
The SPEAKER. Representative Longietti.
The difference between this amendment and many of the other proposals is that this amendment would broaden or tax services that we have not traditionally taxed in Pennsylvania. We would tax things for the first time. And one of the problems that I have with this amendment is that it drives up the cost of doing business. It makes Pennsylvania uncompetitive. And it is particularly harsh on small businesses, because now businesses that have not collected sales tax for the first time would have to hire staff, collect the tax, account for the tax, remit the tax on a quarterly basis, and be audited on the tax ...
Continued Page 194:
... So when you look at this amendment, it taxes far too many things and it drives up the cost of business, particularly small business. It makes us uncompetitive. It is not helpful to economic development. In fact, it is harmful to economic development in that regard and could lead to job cuts. So inasmuch as I am in favor of property tax relief, this measure is the wrong approach for all those reasons, and for those reasons I respectfully ask my colleagues to join me in voting against this amendment.
House Legislative Journal Jan 29, 2008:
Mr. STAIRS. Thank you, Mr. Speaker.
If I may, I would like to be brief in this long discussion. In my many years as a legislator, I have heard the negatives on the property tax and have not really seen too many people that like the property tax. It seems it is despised by all. So that means it is about time we do something. But certainly the legislation in front of us right now, this amendment, I think is the wrong way to go. When people find out what their taxes are going to be, if this was ever implemented, there would probably be a revolution in this Commonwealth.
Mr. GEORGE. Thank you, Mr. Speaker.
Mr. Speaker, I certainly will not be long.
This is the second day we are working with an amendment, and I do not begrudge the time in that we both, both Republicans and Democrats, have been for a dozen years when they each had the majority, had promised some relief on property tax. But whether the pain is in the arm or in the leg, removing it from one part of the body to another does not remove the pain, and the sales tax is the most regressive tax that any working family has to put up with. You know, if an individual lost his job, he still has to pay that homeowner's tax, but he still has to use what little he has to pay sales tax ...
… And adhering to what we have promised, that Pennsylvania now will adopt a plan to help those people in despair, to help those small businesses, to help these individuals who find this aggressive tax more aggressive than ever, but nevertheless, the sales tax is just as aggressive as this is, and I ask that we defeat this amendment.
The SPEAKER. Representative Daley.
Mr. DALEY. Thank you, Mr. Speaker.
... The financial institutions would also face an additional financial burden to change and manage the processes to capture and pay sales and use taxes on this expanded base. Fourthly, the Pennsylvania banks and out-of-State banks, as something that should concern all of us, would be viewed as equals with regard to services performed out of State for Pennsylvania customers, but compliance by out-of-State banks with the use tax in Pennsylvania would be absolutely difficult to enforce and would result, likely, to be unfair to our own banks. That competitive disadvantage for Pennsylvania banks would cause them to move more of their operations out of the State of Pennsylvania. The result could reduce tax revenues, not increase them, and this is according to the financial institutions in Pennsylvania. Services that many community banks purchase from third-party vendors could be deemed to be financial services and subject to taxation. Larger financial institutions offer back-office and other services that could be subject to the 6-percent sales tax.
The SPEAKER. The Chair recognizes the majority leader,
Mr. DeWEESE. Thank you very much, Mr. Speaker.
I will keep my remarks exceedingly brief. I just want to make two quick points. I think many times our debates are enhanced when we go back home in our commentary. The two major reasons I will be counterpoised against my good friend from Berks today come from Harry Readshaw's debate yesterday and from debate from Ms. Harper earlier today. Number one, my Republican colleagues for many years have been against the inheritance tax. They have called it the death tax. I think the Rohrer amendment could conceivably be a death-tax amendment. I think that if you go back to Greene County and talk to Chuck Behm at the Behm Funeral Home or over at the Milliken funeral facility or go down to talk to John Maykuth over in Masontown, and tell them that not only are their services going to be taxed but their vaults are going to be taxed, their caskets are going to be taxed, and if there is a probate dynamic at the end of that unhappy moment, the lawyer fees will be taxed. I just cannot think that amongst the tens and tens and tens of very good reasons that people have come to the microphone today to counter the honorable gentleman from Berks, preeminent in my thought process is I want to look at this as an additional death tax or a series of death taxes.
The Chair recognizes Representative Levdansky.
Mr. LEVDANSKY. Thank you, Mr. Speaker.
... Also, as I pointed out, the devil really is in the details. It really is in the details. This plan, this plan will tax practically everything from day care to death, and almost everything that happens in your life in between will be subject to the sales tax. I think there is just too much uncertainty and unpredictability about what that will mean for Pennsylvania's economy and what that means for funding public education in the Commonwealth.