FOR IMMEDIATE RELEASE
February 6, 2007
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Governor's Budget Includes $2.5 Billion in Tax Hikes

Consumers Would Pay More for Retail Purchases, Utilities, Gasoline

Governor Rendell's budget for Fiscal Year 2007-08 includes proposed tax increases -- including a one-cent hike in Pennsylvania's Sales and Use Tax -- totaling more than $2.5 billion on an annual basis. Further, a new tax projected to cost employers $60 million in FY 07-08 would cost nearly $2 billion annually after four years.

The budget proposal also attempts to mask a large funding gap created after four years of following the Governor's economic priorities. Estimates put the size of the gap at nearly $2 billion.

"There seems to be a significant amount of tax increases in this proposal that will dramatically impact citizens and businesses alike," said Senate President Pro Tempore Joe Scarnati (R-Jefferson). "I have stated time and time again that we must be fiscally responsible as we head into this difficult budget cycle. At this point, we must fully examine the proposed budget and move in a direction that is sensible for all Pennsylvanians. I realize this is just a beginning and look forward to working with the Governor to bring about a sound, conservative final budget."

The Governor requested a one-cent increase in Pennsylvania's sales tax, from 6 percent to 7 percent statewide. Philadelphia and Pittsburgh would see their sales taxes increase from the current 7 percent to 8 percent, under the Governor's request, which is projected to cost Pennsylvania consumers an additional $1.24 billion in FY 07-08. The Governor proposes to use more than $800 million of that money for general state spending with the remainder being used for property tax relief.

A proposed mass transit/oil tax is expected to cost oil companies $760 million, a charge that would be borne by consumers on heating oil bills and at the gas pump. An energy use tax, based on electric usage, will cost consumers $75 million, while a $2.75 per-ton municipal waste disposal fee will take an additional $61.4 million out of Pennsylvanians' pocketbooks.

The Governor also wants tobacco users to pay more. An additional 10 cents-per pack tax on cigarettes is projected to cost smokers $61 million annually, while new taxes on smokeless tobacco, loose tobacco, and cigars is estimated to cost consumers $30.3 million annually.

"We share the Governor's goals of affordable health care, addressing transportation needs and energy independence," said Senate Majority Leader Dominic Pileggi (R-9). "But the costs are stunning. Can we afford these proposals? Over the coming months, we will use committee hearings to thoroughly examine them so the public can fully understand the pros and the cons."

Senator Gibson Armstrong, (R-Lancaster), Chairman of the Senate Appropriations Committee, said he anticipates that the tax increases will be scrutinized during the annual budget hearings set to begin on February 26.

"With public opinion strongly against tax hikes of any kind for any reason, it is surprising to see a plan offered that contains seven tax hikes, adding up to $2.5 billion. It is difficult to see a lot of legislative support for the extensive and expensive tax hikes the Governor is proposing," Senator Armstrong said. "There is a chart in my office that shows the word 'NO' in fifty different languages. We may have to use every variation before this budget process is over."

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