State Budget Proposal: Raise Sales Tax, Lower Property Tax, Fund Education

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Late Tuesday night there was word of progress on the Pennsylvania state budget. The Commonwealth is now more than four months without a spending plan.

Now there’s slow trickle of information from the capitol as to what lawmakers have agreed on with Governor Wolf.

Among the provisions, a hike in the state's sales tax from its current 6 percent up to 7.25 percent with the added revenue going toward property tax relief.

The plan would increase basic education funding by $750 million; that was a key element of Governor Wolf's campaign last year.

But the governor reportedly is not getting a severance tax on natural gas drillers, which was another key issue in his campaign.

And while most agree there’s a need for a reduction of property taxes, many said they’re unsure if they want to pay more at the register for it.

At Elegante Restaurant in Honesdale, it was a steady night of business on this rainy Tuesday night. That's good news for the wait staff there who rely on tips to pad their income. But with the possibility that the state sales tax could go up, they worry tips will go down.

“I do the counter and I'm a waitress. If I go out, yes, you're obviously going to tip and stuff, but it might not be as much as what it was,” said Ashley Rutherford.

With no state budget for months, lawmakers have been hashing out proposals. Now the parts of the latest possible budget package are being released. Under this one, the state is shifting its usage of funding.

The state's 6 percent sales tax would be increased to 7.25 percent. That means for an item costing $100, you would pay $107.25 at the register.

The state would then use the new revenue generated from that to reduce school property taxes.

The tax on casinos that now goes to property tax relief would then go to pay for the state's billowing pension contributions.

Finally, slot machine revenue would then go to provide funding to education.

“It sounds like a bit of a shell game. They're shuffling categories around from what they originally presented things,” said Skip Mendler.

“I guess overall if you're a property owner it's a good idea. However, if you're not a property owner like myself, it could hurt me more potentially by having to pay more for regular goods,” said Johanna Schultz.

For Ray Harrington, the owner of R3 Hardware, this is both a good and bad thing.

“Being a property owner with lots of property taxes, if I had some relief there that would be nice, but I don't want to see sales tax go up as the retail side of it,” said Harrington.

3 comments

  • M4D (@M4Defense)

    Anyone who cuts a tip because they will have to pay an additional .30-.60 cents on any average dining bill, has a real issue. How about the restaurants stop gouging for soft drinks to make up that difference?

  • bella

    Wouldn’t it be a fair proposition to make the whole state 7.25. Why do I have to pay more because I live in Allegheny County. This makes me want to move out of the state. 2nd highest in the country…really…

  • Betty

    If they want to raise sales tax doesn’t anyone else think there should be a cost of living adjustment? Minimum wage at 7.50 hr isn’t cutting it. I am in no way saying to raise minimum wage to 15 a hour but a mandatory cola for every employee in PA would be beneficial.

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