PA Senators Continue Pushing to Replace School Property Taxes with Expanded Personal Income & Sales Taxes - May 2014

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On April 30th the Pennsylvania Senate’s Finance Committee held a hearing on S.B. 76 which would eliminate school district property taxes in Pennsylvania.  The bill would replace the lost revenues:  (a) by boosting the Personal Income Tax rate from 3.07% to 4.34%; (b) by increasing the state sales tax rate from 6% to 7% (making the total rate 8% in Allegheny County and 9% in Philadelphia); (c) by broadening the sales tax to apply to many more services; (d) by narrowing or eliminating many sales tax exemptions (including food and clothing); and (e) by limiting the vendor’s sales tax discount to $300 per year.

The bill now has twenty-six co-sponsors – a majority of the Senate.  When this article was prepared, it was not clear when the Senate Finance Committee may vote on the bill, but it could be scheduled at any time.

One of the more interesting non-tax issues raised at the Senate hearing related to the fact that S.B. 76 would freeze in place existing differentials in per-pupil spending between poor districts and rich districts.  Without changes to the school funding formula, these discrepancies would become state-funded rather than local-funded, thereby exposing the state’s school funding system to more serious constitutional challenge.

An extensive and detailed review of S.B. 76, with recently-proposed amendments to resolve objections, appeared in our April e-blast.  If you did not receive the e-blast, or just didn’t have time to read it at the time, it may be accessed here.

 

Topics:  Legislative Agendas, Legislative Committees, Public Schools, Sales & Use Tax, School Districts, State Taxes, Tax Exemptions, Tax Rates, Tax Revenues

Published In: General Business Updates, Education Updates, Elections & Politics Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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