As the budget impasse enters its eighth week , Governor Ed Rendell is looking for revenue in new places. He’s now pushing for lawmakers to eliminate exemptions in Pennsylvania’s sales tax to help fill the commonwealth’s 3.2 billion dollar deficit.
Governor Rendell says Pennsylvania’s sales tax exemptions don’t make any sense, holding up a cell phone to prove his point.
"You pay sales tax on calls you make on this. But if you have a landline at home, you don’t pay sales tax. You pay sales tax on HBO, Showtime, or any special sports stations you order from cable TV, but you don’t pay sales tax on basis service."
Other exemptions include newspapers, hygiene products like dental floss, wrapping paper, trout, and candy and gum. "Clearly clothing and food should be exempt from the sales tax. But I think we need to look at a lot of the exemptions. A lot of the exemptions make no sense, and are solely the product of effective lobbying by special interests. They’re not the product of any rational basis."
Rendell needs to find new revenue in more creative places, now that lawmakers have nixed his proposal for an increased personal income tax.
Senate Republican spokesman Erik Arneson says the GOP is open to fixing exemption oddities, but wouldn’t want to tax legal fees. He argues larger companies have their own lawyers, but smaller operations have to out-source legal work.
"And so what you wind up with, in a lot of ways, not exclusively, obviously. But in a lot of ways, is a tax on small businesses that do not have those services in-house. And individuals."
Rendell says budget talks are making progress, predicting the final “spend number” will be near 28 billion dollars.