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Pennsylvania Proposes Sales Tax Over Property Tax

  • Apr 3, 2012 | Susan McLain

Pennsylvania State Representative Jim Cox is introducing House Bill 1776 (HB 1776), “…called the Property Tax Independence Act.”

According to Representative Cox’s website, “[t]he Property Tax Independence Act will eliminate school property and local school nuisance taxes across the Commonwealth and will replace those taxes with funding from a single state source.”

The “[s]chool property tax elimination will be accomplished via a two-year phase-out of school property taxes.” The Act will continue to use the “…current sales tax mechanism to fund schools.” This mechanism was put in place in 1953 and “…virtually 100 percent of the revenue from the sales tax is still dedicated to education funding.”

In addition to maintaining the currently dedicated sales tax for education, the existing sales tax rate will be increased from 6 percent to 7 percent. Income tax will be increased from 3.07 percent to 4 percent.  Expansion of the sales and use tax “…proposed in House Bill 1776 brings Pennsylvania more in line with the SUT taxation methodology of the majority of jurisdictions nationwide.” Expansion will still provide exemptions for WIC program food items and clothing that costs $50 or less, however, here is a sampling of goods that will be added to the taxable list:

  • Food not included in the WIC food list
  • Newspapers
  • Horses
  • Bad debts
  • Non-prescription drugs
  • Airline catering
  • Textbooks

Services will also be added to the taxable list:

  • Personal services
  • Recreation services
  • Transportation services
  • Professional services
  • Miscellaneous services such as basic TV, veterinary fees, waste management, recreational parks and custom programming, design and data processing (except business-to-business)

Samples of each of these services can be found on Rep. Cox’s website.

WFMZ reports that “[t]he bill is in its early stages, but some political pundits are already picking it apart. Dr. G. Terry Madonna agreed Pennsylvania would be better off getting rid of the property tax, but he said the bill is not perfect…. There are certain items that are tax exempt that lots of folks won’t support removing.” But Cox says, “When we move away from a school property tax, we broaden the base of taxpayers. The broader the tax base, the more fair it is, and the more stable it is.”

The independent Pennsylvania Coalition of Taxpayer Associations (PCTA) and the Pennsylvania Taxpayer Cyber Coalition (PTCC) endorse the bill. One report says that a companion bill, worded the same, will also be introduced in the Senate when the House bill is introduced. That plus the bipartisan support in the House and Senate makes a truly bipartisan bill.

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Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”