The proposal by Gov. Rendell to broaden the state’s sales tax would make things worse, not better, for the state’s economy and budget. There may be an economically sound policy argument for broadening the sales-tax base, but he doesn’t make the case.
Rendell would raise taxes by $1.4 billion over two years while improperly exempting food, the arts and clothing. So he’s not really broadening the base. His plan also would double-tax tobacco products and telecom services, which already bear significant excise taxes. This makes the governor’s proposal nothing more than a tax-reform ruse.
If the state were to lower its sales tax rate by honestly broadening the tax base in a revenue-neutral manner, the state would become more taxpayer-friendly.
In the end, Pennsylvania cannot balance its budget in a fiscally responsible fashion without addressing public pension costs and implementing necessary spending cuts.
Legislative Specialist, Budget & Tax Policy
Heartland Institute, Chicago
This letter to the editor was originally published in the Philadelphia Daily News.