With retail and nearly every other segment of the economy struggling, 2009 might not seem to be the best year to try squeezing an extra $75 million from Pennsylvania businesses.

But that's what Gov. Ed Rendell, via his 2009-10 budget proposal, would do by eliminating an incentive that allows businesses who pay their sales taxes on time to keep a small portion.

And other states are looking at similar steps, spurred on by tough times and budget deficits.

"The timing could not be worse," said Brian Rider, head of the Pennsylvania Retailers Association, a trade group. But others say the elimination of the discount will barely ding small retailers and is mainly being opposed by mega companies that do billions in sales volume.

To understand how the incentive works, take the example of a store that does a million dollars worth of sales in a year. That means it collects $60,000 in sales taxes for the state.

Under Pennsylvania's arrangement, companies that remit their sales taxes on time (quarterly or semi-annually for smaller companies, and monthly for large ones) can keep 1 percent of what's been collected -- in this case, $600.

Not a huge take, but not pennies, either. And across the state -- collected from tens of thousands of retailers, from movie theaters to big-box home improvement warehouses to telecommunications companies -- it adds up to about $75 million for the year, even though one-fifth of the Pennsylvania businesses that remit sales taxes don't get to keep a bonus.

The point of the bonus is -- or was -- to defray the costs that each business incurs by essentially acting as an unpaid tax-collection agent for the state.

Even with the bonus, "It doesn't come close to covering your costs," Mr. Rider said.

But the state isn't covering its costs either this year, running a multi-billion-dollar deficit and projecting poor returns in its coming budget year. It, too, is scraping together pennies.

"It's an antiquated policy, whose time has probably come and gone," said Sharon Ward, head of the Pennsylvania Budget and Policy Center, sister group of The Keystone Research Center. Both are liberal research groups that tend to promote policies that benefit labor, the poor and women.

She said the policy amounts to "legalized skimming." Most people, she said, "would probably be surprised to find out that when they buy an item in the store, a portion of the money is kept by the retailer" instead of being spent on schools, roads and other state needs.

Twenty-six other states offer similar "dealer discounts," and several are considering the elimination of the discounts, or have reduced them.

Virginia Gov. Tim Kaine is trying to eliminate the state's "dealer discount" to raise revenue. The state's Commonwealth Institute says the discount is outdated because costs of collecting and remitting sales tax are negligible in the age of computerized cash registers and electronic money transfers.

It also argues that small retailers will suffer minimally, if they even notice at all. The great majority of businesses in Virginia (and Pennsylvania) keep just a few dollars a month via the sales tax discount.

Companies that benefit most are the Wal-Marts of the world, with such big sales volume that they'd actually notice the missing discount.

In Pennsylvania alone, Wal-Mart collected $307.8 million in state sales taxes last year, meaning it could be eligible to keep about $3 million through Pennsylvania's vendors allowance.

The same is true in Virginia, which is also facing a huge budget deficit this year.

All the more reason to put an end to the incentive. "Everyone's having to contribute around the table," including businesses, said Michael Cassidy, director of The Commonwealth Institute.

Wal-Mart's press office did not return a call seeking comment.

Good Jobs First, another left-leaning Wal-Mart critic, estimates that the retailer may take home up to $70 million nationally in sales tax revenues through the various state dealer-discount windows.

Indiana and Ohio have reduced their dealer discounts in the past few years. Colorado is looking at "capping" the discount. For example, a company could keep up to $5,000 in sales tax revenue but anything beyond that goes to the state.

Pennsylvania doesn't have a cap, which is why it "loses" almost $75 million a year, third only to Illinois and Texas in terms of potential sales tax revenue that is forfeited.