The Daily Item
On Jan. 10, you published a letter from Charlie Shultz criticizing me for not supporting either House Bill 76 or Senate Bill 76 which would attempt to eliminate school property taxes. Please allow me to respond.
Companion bills in the House and Senate would attempt to eliminate school property taxes by replacing these funds with an increase in the Personal Income Tax (PIT) from 3.04 percent to 4.34 percent and the Sales and Use Tax (Sales Tax) from 6 percent to 7 percent.
In regard to the Sales Tax, some of the many items that are not currently taxed but would now be subject to the new 7 percent tax would be most food items; many clothing items; funeral expenses including caskets; college textbooks; movies; prebuilt housing; Bibles; United States flags; diapers, toilet paper, toothpaste and other personal hygiene items; legal services; financial services; and newspapers.
You must realize that under Senate Bill 76, Wal-Mart and Sheetz and Target and Weis Markets and Giant and any other large retail business would no longer pay school property taxes. Therefore individuals would need to make up the difference by paying 40 percent more in income tax and significantly more with all of the new items subject to the sales tax.
I might add that if you are a small business person and you are leasing your facility you should be very concerned. You would see a 40 percent increase in your income tax while receiving no relief from the elimination of the property tax.
Further, one should know that income taxes and sales taxes are not stable and reliable taxes. For fiscal year 2012-13 for the Commonwealth of Pennsylvania, collection of the sales tax was $325 million below estimate and we failed to meet our projections 10 out of 12 months. For fiscal year 2011-12, the collection of income taxes was $199 million below projections and we failed to meet our projections 8 out of 12 months.
On Oct. 1, 2013, the House considered House Bill 76 as an amendment to House Bill 1189. House Bill 76 was defeated by a vote of 59-138 because of many of the concerns I have mentioned. In addition, the Independent Fiscal Office has indicated that under House Bill 76 and Senate Bill 76 there would be a shortfall of hundreds of millions of dollars by Year 5.
I certainly support and acknowledge efforts to reduce the reliance of schools on local property taxes and to control the costs. In the current fiscal year, gaming revenues are providing $611 million in relief to all residential property owners. An additional $166 million is available to senior and disabled property owners through the Property Tax and Rent Rebate program. Further, legislation was adopted several years ago that no taxes levied in support of public schools can be raised more than an inflationary index in a given year without the approval of the local electorate through a referendum.
While I applaud efforts to reduce or eliminate property taxes, the “devil” is often in the details.
Sen. John Gordner represents the 27th Senatorial District, which includes all of Columbia, Northumberland, Montour and Snyder counties and part of Luzerne and Dauphin counties.