A recent change to Pennsylvania’s tax code will now limit
the amount of reimbursement received by businesses that collect the sales tax
to $25 a month, or $300 annually. This
change was part of a number of tax increases and other initiatives enacted to
raise an additional $1.3 billion for the state budget.
Previously, businesses were able to keep one percent of the
total amount of sales tax collected, if it was remitted in a timely fashion to
the state. According to Department of
Revenue figures, nearly 190,000 businesses in Pennsylvania collect the sales
tax. Of the 45 states that have a sales
tax, the majority allow for vendor compensation. Only 13 have a cap in place, and the $25
monthly cap enacted by Pennsylvania lawmakers will be the lowest cap in the
country.
Lawmakers clawed back this compensation while doing nothing
to improve upon the burdens of collecting the sales tax. Small-business owners have shared with NFIB
many of their frustrations with the sales tax.
Chief among them is the fact that business owners must often prepay
sales tax liabilities, even before receiving payment themselves. This policy, which was instituted under
former Governor Ed Rendell as another means to raise additional tax revenue,
should be repealed.
The same tax code legislation that reduced vendor
compensation also included higher taxes on community banks, additional tobacco
related taxes including on e-cigarettes and vapor products, and a new tax on
digital downloads. Meanwhile, lawmakers
somehow found the ability to create 10 new industry specific tax credits
including an increase in the Film Production Tax Credit, a Concert Rehearsal
and Tour Tax Credit, a Video Game Production Tax Credit, and a Waterfront
Development Tax Credit to name a few.
NFIB actively opposed this legislation. The need, by lawmakers, to raise an
additional $1.3 billion was driven by a spending plan that raised expenditures
by over 5 percent, while the rate of inflation has been below 1 percent. We are also disappointed that another budget
cycle has come to a close without tackling our number one fiscal crisis through
comprehensive public pension reform.
To see how your lawmaker voted on this legislation, click on
the links below:
