Rendell Wants To Expand Sales Tax But Lower Rate

Governor Ed Rendell wants to lower Pennsylvania’s sales tax rate but widen its base by applying the levy to 74 currently exempt items.
The proposal was a highlight of Rendell’s eighth and final budget address. The spending plan totals $29 billion....up $1.1 billion or 4% from this year's budget.
Rendell wants to lower the state sales tax from six to four percent, but also apply it to items like newspapers, candy, gum, basic television fees, firewood and spectator sports tickets.
He says the present system of loopholes doesn’t make sense.

"If you do your own laundry, the laundry detergent you buy is subject to the sales tax. But if you have your laundry done it’s sales tax-free. Soda is taxed in Pennsylvania, but bottled water and fruit juice – products often made by the same soda companies, are not."

He says the state could gain an extra 531 million dollars from the proposal, but Senate Republicans say it’s a “non-starter” in the upper chamber.
Senate President Pro Tem Joseph Scarnati labels it a tax increase.

"Pennsylvanians, I think, are very very clear, whether they’re looking at Washington policy or Pennsylvania policy – tax increases are increases. And I don’t think the general public can withstand it, nor can we provide it."

Rendell says the shift would generate 531 million dollars. He wants to set that and other new revenue aside in a special fund the state couldn’t tap into until federal stimulus dollars expire in 2011.
The reserve account would also include money from proposed taxes on smokeless tobacco, cigars and natural gas drilling.