On April 30, the Senate Finance Committee held a hearing on Senator Argall’s amendment to Senate Bill 76, which proposes to:
- Increase the state’s Personal Income Tax from 3.07% to 4.34%
- Increase the state’s Sales and Use Tax from 6% to 7 % (7% to 8% in Pittsburgh and 8% to 9% in Philadelphia)
- Expand the Sales and Use Tax to cover more goods and services
- Establish the Education Stabilization Fund to disburse funds to districts
The bill would allow school districts to impose Earned Income or Net Profit taxes through voter referendum if they incur new debt. For Independent Fiscal Office analysis of SB 76, see: http://www.ifo.state.pa.us/download.cfm?file=/resources/PDF/HB-SB_76_IFO_Fiscal_Analysis.pdf
While Senator Argall’s amendment attempted to clarify taxable goods and services under the bill by using North American Industry Code classifications, the hearing left many unanswered questions, such as: possible “unintended consequences” of taxing certain legal services and a negative impact on food banks. An interesting question was posed by Senator Teplitz as to whether the bill could lead to a constitutional challenge of funding districts via the Education Stabilization fund since the state does not yet have a Basic Education Funding formula. Senator Folmer, Majority Chair of the Senate Education Committee, answered that question by assuring committee members such a formula was forthcoming through current legislation. (He is referring to Representative O’Neill’s House Bill 1738, which proposes to set up a Basic Education Funding commission, similar to the one convened to study special education funding in the state).
In the end, it was clear many questions on SB 76 remain unanswered. Watch the video of the hearing.