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Hike in sales tax touted as way to be rid of levy

Wednesday, May 07, 2003

By Johnna A. Pro, Post-Gazette Staff Writer

HARRISBURG -- Legislators in the state House and Senate presented competing proposals yesterday to eliminate property taxes, one that would raise the state sales tax to pay for the plan while the other would lower it but end exemptions on food, clothes and even visits to the doctor.

Leading the effort on the Senate proposal, which would raise the sales tax and some other taxes, is Sen. Sean Logan, D-Monroeville, who has the support of some Democrats and at least two Republicans.

Under Logan's plan, which was crafted by KDKA radio announcer Bob Logue and a group called Stop Taxing Our Properties, the state's constitution would have to be amended so that all property taxes on homesteads could be eliminated. Property taxes would continue to be levied on commercial and industrial properties.

Logan said the proposal would save taxpayers $6.2 billion in residential property taxes, money the state would then recover by increasing the personal income tax from 2.8 percent to 4.35 percent, the sales tax from 6 percent to 7 percent and the real estate transfer tax from 1 percent to 3 percent.

"This plan is reasonable and it makes sense," Logan said.

"It can be done. It's tough votes, it's dramatic change, but it can be done."

He said increasing the personal income tax would raise $4 billion, the sales tax $1.2 billion and the real estate transfer tax $870 million.

"It's different," said Sen. Jay Costa, D-Forest Hills. "It's thinking outside the box."

Gov. Ed Rendell has proposed raising the personal income tax to 3.75 percent and closing corporate tax loopholes to raise $2.3 billion. Rendell's plan also calls for legalizing slot machines at horse racetracks in the state, increasing the state's beer tax, establishing a tax on cell phones and levying fees on drivers who commit motor vehicle violations.

Sen. Jane Orie, R-McCandless, whose party controls both the Senate and the House, praised Logan's proposal.

"This to me is a plan that's livable," Orie said.

Rep. Marc Gergely, D-McKeesport, said he will introduce similar legislation in the House.

In the House, legislators also will be looking at a separate plan being touted by a group of legislators called the Commonwealth Caucus.

That group, lead by Rep. Samuel Rohrer, R-Berks, wants to eliminate school property taxes for all property owners over a two-year period. Municipal and county property taxes would not be eliminated. At the same time, the group wants to eliminate local earned income taxes, mercantile taxes, amusement taxes and occupational taxes.

Instead of the those taxes, the group wants to lower the sales tax rate from 6 percent to 4 percent and eliminate nearly all exemptions, which they said would double the money raised by the sales tax to $15.4 billion annually.

Under the plan, food and clothing would be taxed, as would such things as doctor visits, deodorant, textbooks and caskets.

In Allegheny County, the sales tax rate would be 5 percent because residents pay an additional 1 percent to fund regional assets, such as stadiums, museums and arts programs.

Rendell spokeswoman Kate Philips said the governor expects to look at various ideas, including the ones that were proposed yesterday.