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Commonwealth Foundation


GOP-Controlled Legislature Sends Tax Hikes to Governor

by News Release
 

Legislature Sends $600 Million Tax Increase to Gov. Wolf
Pennsylvanians to Pay More for Cigarettes, eBooks, Apps, Streaming Video

July 13, 2016, HARRISBURG, Pa.–Hoping to balance the unconstitutional, unbalanced state budget that Gov. Wolf allowed to become law Monday night, the state House and Senate today voted to hit Pennsylvanians with an array of taxes that will make listening to iTunes, reading eBooks, or watching Netflix more expensive.

Lawmakers approved nearly $600 million in additional taxes, including a $1-per-pack cigarette tax increase, taxes on tobacco and e-cigarettes, a new sales tax on digital downloads, and an expansion of the income tax to lottery winnings. Even with these taxes and additional one-time revenue from fund transfers and tax amnesty, the budget remains unbalanced.

"This year's budget process shows why you shouldn't spend more than you have," commented Nathan Benefield, vice president of policy for the Commonwealth Foundation. "First, the Legislature erred in sending Governor Wolf a budget that spent far more than we can afford without a means to pay for it. Next, the governor neglected his legal duty to ensure a balanced budget by letting the budget become law. And now, lawmakers are rushing through tax hikes on hardworking Pennsylvanians to pick up the tab for their mistakes. I guarantee you Pennsylvanians won't be happy to know their favorite app just got hit with a new sales tax."

This tax increase represents only about one-fourth of the nearly $3 billion tax increase Gov. Wolf called for in his February budget address.

Benefield continued:

While Pennsylvanians can be thankful they've been spared Gov. Wolf's multi-billion-dollar tax increase that would have hiked personal income taxes, this tax package is not a victory for Pennsylvania families. What's more, even with the tax increases, the budget remains unbalanced, as it relies on $100 million from the expansion of online gambling–a provision that hasn't even passed the Legislature yet–and borrowing $200 million from other funds.

Our state constitution doesn't say the Legislature can pass something "pretty close" to a balanced budget, or that lawmakers can promise a balanced budget in the near future. It requires a balanced budget at the time the budget becomes law. By passing an unbalanced budget with unsustainable spending and depending on unreliable revenue sources to fund it, lawmakers and Gov. Wolf are not only neglecting the law, they're virtually guaranteeing Pennsylvania will face a larger budget hole next year.

Nathan Benefield is available for comment. Please contact Gina Diorio at 862-703-6670 or gld@commonwealthfoundation.org to schedule an interview.

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The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.



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