PA Could Face Nation’s Second Highest Sales Tax

Member Group : Commonwealth Foundation

Commonwealth Foundation
Contact: Gina Diorio, 862-703-6670, [email protected]

Pa. Could Face 2nd-Highest Sales Tax in America
Latest Budget Plan Seeks Biggest Sales Tax Hike Since 1956

November 10, 2015, Harrisburg, Pa.—Pennsylvanians may soon pay more for nearly everything they buy. Under the latest proposed budget deal, state sales taxes would jump from 6 percent to 7.25 percent—giving Pennsylvania the second-highest statewide sales tax in the nation.

Only California would rank higher if Governor Wolf gets his way. While several states would have higher combined state and local rates, new rates in Pittsburgh (8.25 percent) and Philadelphia (9.25 percent) would be among the highest in the region.

"Before we ask Pennsylvanians to pay more for everyday purchases, the governor and lawmakers should ensure all other options have been explored," commented Matthew Brouillette, president and CEO of the Commonwealth Foundation. "That means enacting real public pension reform that puts the state back on a fiscally-responsible track, generating revenue by privatizing the state liquor monopoly, and cutting off the corporate welfare gravy train by eliminating unfair business subsidies."

State Sales Tax History

An increase from 6 to 7.25 percent would be the first statewide sales tax change since 1968 and the second-largest sales tax increase in state history.

Year Sales Tax Rate
1954 1.0%
1956 3.0%
1959 3.5%
1959 4.0%
1963 5.0%
1968 6.0%
Source: Pa Dept. of Revenue, The Tax Compendium

"The state sales tax rate has not changed in nearly 50 years and has never been lowered," Brouillette commented. "If Governor Wolf wants to enact such a structural change, taxpayers should be asking what they’re getting in return. Fundamentally reforming public pensions to move newly hired workers to 401(k)s and privatizing both retail and wholesale liquor sales should be part of any resolution to these negotiations.

"Simply ending unnecessary corporate welfare programs would save nearly $700 million annually—and it wouldn’t cost taxpayers a dime."

More details on the latest sales tax proposal are available here.

Matthew Brouillette and other Commonwealth Foundation experts are available for comment today. Please contact Gina Diorio at 862-703-6670 or [email protected] to schedule an interview.

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