Report: Wolf Considering Sales Tax Increase

By Andrew Staub | PA Independent

Just days before Gov. Tom Wolf gives his budget address, Pennsylvanians are riding a seesaw of tax policy announcements and rumors.

A report from KDKA-TV in Pittsburgh citing unnamed sources says Wolf wants to raise the state’s sales tax from 6 percent to 6.6 percent and the personal income tax from 3.07 percent to 4.07 percent to help offer property tax cuts. The news follows Wolf’s revelation he wants to cut the state’s 9.99 percent corporate net income tax in half over two years — a major policy move that could keep $1.25 billion back in businesses’ coffers.

Jeffrey Sheridan, Wolf’s press secretary, did not return a message seeking confirmation of the report, but it’s looking as if Tuesday’s budget address will include a mix of tax hikes and cuts. Wolf has already announced plans to pursue a severance tax on the natural gas industry to bolster education funding.

Raising the sales tax is a new wrinkle, and it would be a departure from Wolf’s campaign statements indicating he did not support increasing the sales tax because it could adversely affect low-income earners. That immediately drew rebuke from the Pennsylvania Republican Party, which issued a “Flip-Flop Alert.”

“Governor Wolf is breaking his promise to voters not to raise the sales tax after less than two months in office,” GOP spokesman Megan Sweeney said. “Throughout the course of his campaign, Governor Wolf gave very few specifics about his plans for Pennsylvania, but clearly portrayed himself as an opponent of raising the sales tax, only to break his promise to the voters with this first major act.”

Exactly what Wolf will reveal Tuesday is still uncertain. Lobbyists, reporters and lawmakers alike have been left chasing rumors.

State Senate Majority Leader Jake Corman, R-Centre, said Thursday afternoon he has heard the rumors about the sales tax from media, but that Wolf “has not discussed anything with us as of yet.”

Senate Republicans would not support an increase to the sales tax or a personal income tax, Corman said. He reiterated the chamber’s top priority is public pension reform.

“We’re not going to discuss any new revenue until pensions are done,” Corman said.

While much of the discussion has been fueled by back-channel talks, the National Federation of Independent Business in Pennsylvania is on the lookout for changes to both the personal income tax and sales tax.

Many small business owners use the personal income tax to file their earnings, and a hike to the sales tax could reduce consumer demand at small retailers, according to the NFIB.

KDKA also reported Wolf wants to broaden the sales tax to cover clothing and professional services.

“That’s been a big issue for small business,” NFIB lobbyist Neal Lesher said, pointing out businesses would have to pay more for needs such as accounting services.

Without knowing the full details of Wolf’s plan, it’s hard to say whether property tax cuts could help balance out the impact of the tax policies, Lesher said. There was also skepticism Wolf’s plan to raise taxes to send more state subsidies to schools would net real relief.

David Baldinger, spokesman for the Pennsylvania Coalition of Taxpayers Association and coordinator of Pennsylvania Taxpayers Cyber Coalition, has advocated for the elimination of property taxes. Wolf’s plan might grant a temporary reprieve, but schools would raise property taxes once revenues stop keeping pace with expenses, he said.

“We aren’t going to support what he’s trying to do,” Baldinger said. “Hopefully he’ll get the message. If you want to do this, take it all the way and get rid of it.”