01/18/2006
CONTACT: Kevin Shivers, (717) 232-8584 or Jim Jennings, (240) 645-4099
HARRISBURG, Pa. -- Raising taxes on small businesses in order to pay for residential school district property tax makes bad economic sense and exacerbates the noncompetitive environment in Pennsylvania, according to Brian Landon, owner of Landon's Car Wash and Laundry in Canton, Bradford County.
"Under this legislation, small businesses would see a rise in the personal income tax, an increase in the amount of sales tax paid on items and services required to run a business and an increase in the amount of sales taxes collected and remitted and undoubtedly a continued increase in real estate taxes," said Landon in testimony before the Senate Committee on Legislation. Landon was testifying on behalf of the National Federation of Independent Business.
The bill, SB 854, would raise the personal income tax and increase taxes on a variety of services with no guarantees that residential school district property taxes won't continue to rise, he said.
"SB 854 does not propose any method to reduce school costs and will not prevent school districts from raising taxes in the future," Landon said. "It does nothing to reduce my small business property taxes. Excluding business property from any proposed reduction in property taxes is patently unfair to Pennsylvania's smallest job creators.
Landon noted that in his coin laundry, "you simply cannot add 6 percent to the final sale at a cash register. You must collect the additional sales tax via the coin acceptance mechanism, and most systems only accept quarters."
He cited the December NFIB Small-Business ConditionsSM report where only 20 percent of small-business owners reported raising their selling prices to keep up with rising costs for materials, overhead and energy.
"Small businesses are absorbing the current spike in costs in order to remain competitive in a tight marketplace. As goods and services that all businesses use become more expensive — thanks to the sales taxes on services this bill provides for — fewer dollars will be available to increase wages or benefits, or create new jobs."
"Simply looking for ways to raise more revenue does not address the reason why school costs are rising in the first place," Landon said.
More than 98 percent of businesses in Pennsylvania are small. These firms employ more than half of Pennsylvania's workers.
