Supporters of a plan that would dramatically expand the sales tax in an effort to eliminate school property taxes held a news conference last week to announce that their plan "can work." The Commonwealth Caucus has maintained that it can broaden the sales tax to include food, clothes and a long list of goods and services, lower the sales tax rate to "as low as 4 percent" and still raise enough new state taxes to eliminate local school taxes.

		Gregory C. Fajt is secretary of the Pennsylvania Department of Revenue.

As secretary of the Pennsylvania Department of Revenue, I commend the Commonwealth Caucus for trying to eliminate school property taxes. However, I have serious concerns about the viability of the Commonwealth Caucus plan. I question whether the proposal can raise enough new state taxes to reach its goal of totally eliminating school property taxes and so-called "nuisance" taxes, because the numbers and assumptions are not well-documented. In addition, I am troubled by the heavy burden the plan will place on low-income Pennsylvanians and on the state's growing service economy.

Despite the recent announcement that the Commonwealth Caucus plan "can work," the study concedes that a rate as high as 4.5 percent might be necessary to make it balance with even the most basic and legally required exemptions. It is also telling that the Commonwealth Caucus plan "works," in part, by tripling the state Real Estate Transfer Tax. The transfer tax increase would add $2,000 to the cost of a $100,000 home.

The plan's supporters claim that it would create 139,000 new jobs in Pennsylvania, but no evidence is offered for this claim.

There is also no calculation of a hidden impact on a homeowner's federal taxes. Remember that property taxes are deductible for federal tax purposes; sales taxes are not.

As a result, property tax reductions would be offset by lost federal tax deductions. Have the claimed economic benefits been reduced for the millions in additional federal income taxes Pennsylvanians will pay under the plan? No one can tell, because no documentation is available.

Expanding the sales tax to food, clothing and footwear will make the tax even more regressive.

Low-income Pennsylvanians who rent will pay at least 4 percent more to feed and clothe their families, yet in many cases they won't receive a dime in property tax relief. They will also face new sales taxes on water, natural gas, electricity, home heating oil and other basic necessities.

The Commonwealth Caucus plan would add billions of dollars in new business taxes to the service sector of Pennsylvania's economy. Businesses will pay at least 4 percent more for basic expenses such as legal, accounting and computer services.

The Commonwealth Caucus plan would tax doctors' office visits. It would tax legal, financial, computer, dental, funeral, accounting, bookkeeping, beautician, surveying, architectural and veterinary services. It would even tax college tuition as an "educational service." Other newly taxed items would include:

Non-prescription drugs.

Checking account and ATM fees.

Newspapers and magazines.

Textbooks, including the Bible.

Caskets.

Dry cleaning.

School buses.

Flags.

Basic cable television.

Trade-in value of cars at dealers.

Tickets to entertainment and sport events.

The Commonwealth Caucus could choose to exempt some of these items and services from the sales tax when it formally introduces its proposal.

But every exemption will reduce the amount of new taxes the Caucus can collect and require a yet higher sales tax rate to make up the difference.

Like all plans to eliminate property taxes, the Commonwealth Caucus plan calls for tax shifting, not tax reduction.

Unfortunately, the caucus' plan would shift the cost of public education to the state's most regressive tax. At the same time, it would discourage economic growth in the service sector, which is the primary source of new jobs in Pennsylvania's economy.

The flaws in the Commonwealth Caucus plan help to illustrate the advantages of Gov. Rendell's plan to lower school property taxes.

The governor's plan would use revenue from slot machines to provide $1 billion in property tax relief. It would not raise one tax to lower another. It would not force low-income Pennsylvanians to pay higher sales taxes and get nothing in return. And it would create thousands of new jobs.

Again, I commend the Commonwealth Caucus for trying a new approach to eliminate school property taxes. The goal is worthy. Unfortunately, the Commonwealth Caucus plan is not.