Pa. House panel approves property tax reduction plan
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HARRISBURG -- The state House Finance Committee voted 21-8 today for a bill that would make serious reductions in homeowners' school property taxes but would also make people pay higher income taxes and state sales taxes.
The committee approved House Bill 1600, by Rep. David Levdansky, D-Forward. He proposes raising about $2.5 billion by doing three things. He would raise the state sales tax by 0.5 percent (making it 6.5 percent in most counties but 7.5 percent in Allegheny and Philadelphia counties.)
He would also raise the personal income tax rate by .22 percent, to a total of 3.29 percent. Those two moves would take effect July 1. Together they would generate an additional $1.5 billion, to which he would add the expected $1 billion from slots revenue once all 14 casinos are up and running. The resulting $2.5 billion would be used to lower property taxes.
Mr. Levdansky expects such tax shifting will slice several hundred dollars from the average homeowner's property tax bills. The full House is expected to debate the bill in November.
The Levdansky bill will be competing with another one introduced today by a group of bipartisan legislators, led by Rep. Sam Rohrer, R-Berks County. It aims at the complete elimination of school property taxes, which would require the raising of about $8 billion statewide.
The Rohrer plan would raise the personal income tax by .85 percent, to a total of 3.92 percent. He would keep the sales tax at 6 percent but would extend it to a long list of "services.'' Probably for strategic purposes, he didn't enumerate the entire list of services whose cost would go up but said it would include businesses such as accountants, lawyers, architects, plumbers, computer fixers, electricians, lawn care services and many others.
The services that would not be subject to the sales tax would include hospitals, doctors, dentists, advertising and wholesale manufacturing purchases. Prescription drugs and public transportation fees also wouldn't be taxed. As they are now, food and clothing and food stamp purchases would be exempt from sales tax.
The Rohrer group is also counting on the $1 billion in revenue expected from casinos.
Mr. Rohrer said the problem with the Levdansky bill is that while it will lower property taxes for a few years, school districts can always increase their budgets, forcing property taxes to go back up again.
First Published October 31, 2007 1:05 pm