HARRISBURG -- A state senator from Eastern Pennsylvania has come up with a startling proposal on tax shifting, one that would virtually eliminate school property taxes in many districts by significantly raising the sales tax and personal income tax rates.

Under the plan of Sen. James J. Rhoades, R-Schuylkill, Pennsylvania would have the highest sales tax rate in the nation by far -- 9.19 percent in 55 counties and 10.19 in two of them, Allegheny and Philadelphia. The state sales tax is 6 percent now in most Pennsylvania counties, but it's 7 percent in the two largest counties.

Nationwide, California has a 7.25 percent sales tax and four states, New Jersey, Mississippi, Rhode Island and Tennessee, have a 7 percent rate.

Under the Rhoades plan, the personal income tax rate also would jump significantly, to 4.36 percent from the current 3.07 percent.

Mr. Rhoades, chairman of the Senate Education Committee, wants the proposal to go before voters in a referendum in November 2008.

Raising those two taxes would generate $9 billion in additional revenue, Mr. Rhoades told a news conference yesterday. That would permit the elimination of school property taxes for both homeowners and businesses in 305 school districts. In the other 196 districts, property taxes would be cut by an average of 96 percent, he said.

But he said none of these moves would happen without approval from Pennsylvania voters. He wants the Legislature to put the question of this major tax-shifting proposal on the statewide ballot in November 2008. But he said he wants to get the discussion started now.

The referendum results would be binding on the Legislature. If voters gave the go-ahead for the tax shift, the Legislature would have to enact it in 2009, he said. If it's defeated, the state's tax structure would stay as it is.

"For years we have been tinkering around the edges of property tax reform, never fully resolving the problem," Mr. Rhoades said. "My legislation will let the people decide whether to virtually eliminate school property taxes in Pennsylvania."

A property tax measure called Act 1 was soundly defeated in most school districts in May, he noted. But that would only have shifted personal income taxes by a small amount in most school districts, usually 0.5 percent, and would have caused only a small drop in property taxes. He said it's time to think boldly about tax shifting.

While some critics may think it's the Legislature's job to make tough decisions about tax rates, Mr. Rhoades said this would be such a major change that the voters themselves should do it.

"The way to make the best decision about whether to replace school property taxes with state taxes is to leave it up to the people," he said. "This is a bill that requires difficult choices, choices about what kinds of taxes are most fair. Let's allow the people to make the decision."

Raising the income tax rate to 4.36 percent would raise about $4.5 billion in new revenue, with a like amount generated by the proposed increase in the sales tax, he said.

If the referendum were approved, "Every single nickel will go to reduce or eliminate [school] property taxes on all property tax payers -- residences, businesses, farms, everyone," he said. County and municipal property taxes would still remain, however.

Gov. Ed Rendell gave Mr. Rhoades credit for bringing a controversial issue up for discussion. But Mr. Rendell thought the senator went a bit too far. Mr. Rendell said he could support some shift from property taxes to income and sales taxes, but all three levies should remain in the mix for funding schools.

"I don't think we should totally eliminate the property tax," Mr. Rendell. "It's a stable tax," with predictable outcomes for school boards to use.

Mr. Rendell, a Democrat, also questioned if Mr. Rhoades' Senate GOP colleagues would support such a radical idea. Senate Republicans have criticized any recent tax increase proposals, he said.

Senate GOP spokesman Erik Arneson was noncommital. "This is a new approach. Our caucus will review it and listen to feedback from constituents in the coming weeks."

Rep. David Levdansky, D-Forward, who has a much more modest tax shifting plan, said, "I welcome Sen. Rhoades into the fray." The Levdansky plan would hike the sales tax by only 0.5 percent and would raise the personal income tax rate only to 3.29 percent.

Mr. Levdansky said he fears that a sales tax rate as high as 9.19 percent or over 10 percent in the two largest counties "will have a negative impact on consumer spending."

He also said that many small businesses won't like a 4.36 percent income tax rate because that's also the rate that many companies are taxed on their income.

"But I'm glad to see he's stepping forward with his proposal and I look forward to working with him," Mr. Levdansky said.