This week the
Legislature and the Governor continue to wrangle over a state budget that is
almost 6 months late. They seem to be
zeroing in on a $30.8 billion budget that will increase state spending by 5.4%
over last year. While this is down
significantly from the 16% increase the Governor sought in his budget proposal
earlier this year, it still spends too much.
To pay for this new spending they will need to raise approximately $1.2
billion through tax increases.
Spending is the number one cause of tax increases. While that might sound overly simplistic, the
truth is it really is that simple.
That’s why NFIB Pennsylvania has long supported a reform known as the
Taxpayer Protect Act, which would limit the growth of state spending to an
inflation plus populations growth index.
In fact, at a series of legislative hearings early this year on jobs and
economic growth, spending
constraint was the number one issue that NFIB recommended. According the National Conference of State
Legislatures, 30 states currently have a tax or expenditure limitation in
place. The time has come for
Pennsylvania to do the same.
While the final
Pennsylvania state tax package has yet to be made public, several tax changes
are under consideration. They potentially
include all or some of the following: an increase in the personal income tax
rate; an increase in the sales tax rate; an expansion of the sales tax to
include items and services not currently taxed; a new tax on businesses for
filing their taxes; new taxes on tobacco products and e-cigarettes; increased
taxes on banks; and a reduction in the compensation businesses receive to
assist with their cost of collecting the sales tax for the state.
Each of these tax
increases will be detrimental to small-business growth in Pennsylvania, and
many of them would hit certain industries harder than others. It’s time to get serious about controlling
spending in Pennsylvania.