Legislature may consider 1% sales tax plan
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HARRISBURG -- Gov. Ed Rendell and state legislators have been talking a lot lately about whether to increase the state income tax to 3.57 percent from its current 3.07 percent for three years.
But another revenue-raising plan hasn't gotten nearly as much attention -- allowing counties to increase their sales tax by 1 percent if they want to. It stems from a desire by many counties to broaden their sources of income beyond the overworked and unpopular property tax.
"Counties would like to have the option to consider a 1 percent sales tax," said Douglas Hill, executive director of the County Commissioners Association of Pennsylvania.
Legislation could emerge as early as this week to give counties permission to add a 1 percent countywide sales tax on top of the state sales tax. Part of the revenue generated would have to go to reduce property taxes.
Currently, two of the state's 67 counties, Allegheny and Philadelphia, have a 7 percent sales tax -- 6 percent for the state and 1 percent for the county. Allegheny has had the extra tax since 1994 and uses it, in part, to fund the Regional Asset District.
One new measure, House Bill 1824, would permit Philadelphia to increase its sales tax by another 1 percent, for a total of 8 percent.
Mayor Michael Nutter is pushing the Legislature to allow Philadelphia to do that, with the additional money helping Philadelphia pay municipal pension costs.
Another measure, House Bill 1875, has been proposed by state Rep. Tom Caltagirone, D-Berks. As now written, it allows just third-class counties, which include Westmoreland and Erie, to enact an extra 1 percent sales tax.
But Mr. Caltagirone said he expects the bill to be amended in the Appropriations Committee this week -- and expanded to permit 66 counties (all except Philadelphia) to add an additional 1 percent. If the bill is passed, the additional sales tax still would have to be enacted by the commissioners of each county.
The amended Caltagirone bill would apply to Allegheny, but County Executive Dan Onorato won't seek to go to 8 percent.
"The county executive has no interest in increasing the sales tax in Allegheny County," said his spokesman, Kevin Evanto.
Mr. Onorato is widely expected to seek the Democratic nomination for governor in May 2010 and tax increases won't help his chances. He's taken a lot of heat for Allegheny County's current tax on alcoholic drinks, which also had to be authorized by the Legislature.
Mr. Hill said counties need an option for raising revenue besides the property tax, where frequent annual increases are a sore point for many property owners.
Under Mr. Caltagirone's legislation, if a county does increase its sales tax by 1 percent, half the new revenue would go into county coffers, and the county would have to use some of it to reduce property taxes.
Another 40 percent of the additional sales tax revenue would be split among the municipalities in the county; and the rest would go for "collaborative services," such as joint police operations, equipment purchasing and regional booking centers.
Both sales-tax bills will likely be included in the new state budget for fiscal 2009-10, which began July 1, but no one knows when the Legislature will enact the budget.
First Published July 27, 2009 12:00 am
