As the summer comes to an end, the focus in Harrisburg remains the state budget – which two months into the current fiscal year, has to be finalized. While the House, Senate and Wolf administration were able to agree to a $32 billion spending plan; they have yet to come to a consensus on how to pay for it. The debate over a revenue package took on a new dimension at the end of July when the Senate passed a plan that includes $600 million in tax increases on Pennsylvania residents and businesses.
The Senate’s proposal includes: a new tax on residential and commercial use of natural gas; an increase to residential and commercial electric bills; a higher tax on phone bills; as well as a severance tax on the natural gas industry. In addition to the tax increases, the Senate’s revenue package calls for borrowing $1.3 billion against the state’s Tobacco Settlement Fund; $200 million in special fund transfers and $200 million from a yet-to-be enacted gaming expansion bill in order to balance the 2017-18 budget. While it appears that this proposal has the support of the Wolf administration, it has been met with resistance in the House of Representatives.
The PA Chamber understands that the Commonwealth is facing numerous economic challenges. But we’re disappointed that the Senate has voted in favor of a $600 million tax increase that will hurt Pennsylvania’s ability to compete and will increase job creators’ operating costs for electricity, natural gas and communications services. At a time when the state’s unemployment rate has consistently been above the national average, proposals like H.B. 542 will make Pennsylvania’s business climate more burdensome, further weakening our state’s economic growth.
Of Pennsylvania’s competitive business advantages, affordable, accessible energy—particularly natural gas—stands out perhaps the most. However, this revenue package attacks that advantage by placing a tax on natural gas users and imposing an additional severance tax on the natural gas industry. Should this proposal be enacted, natural gas will be taxed, in essence, four times: prior to drilling and on an annual basis with the impact tax; during production with the severance tax; at consumption with the gross receipts tax; and finally, every year with business and income taxes on any company involved in drilling, moving or using natural gas. Other tax proposals that are part of the package – such as the tax increases on electricity and phone use, as well as changes to the state’s tax appeals process – will also increase costs for employers.
The state is in poor fiscal health because the economy isn’t growing – and this tax package would be a major step backwards. These costs will reduce Pennsylvania businesses’ ability to compete in the global economy and re-invest in the state, and will result in higher prices to consumers and end users of their products. We are leading a coalition against these tax increases and encouraging Pennsylvania businesses to reach out to their local representative and urge them to oppose this bill. It’s not too late to make your voice heard! Visit www.protectpajobs.com to learn more and sign a letter of opposition to the Senate-passed Tax Code bill.