Pattye Benson

Community Matters

Pennsylvania sales tax

Increase in Sales Tax Rate – According to Local CPA, Don’t be Surprised!

A couple of weeks ago, the T/E School Board voted against an EIT voter referendum question for the April primary. (School Board members Kevin Mahoney and Anne Crowley favored taking the EIT question to the voters).

I received an interesting comment from Jim Newhard in response to T/E School District’s response the November 15 post. Rather than adding to the earlier post, I thought it could make for interesting commentary. A small business owner in Paoli, Jim Newhard is a CPA. I served with Jim on the board of the Paoli Business & Professional Association. Thanks Jim for weighing in – anyone else think economics may eventually lead to an increase in our sales tax rate?

From Jim Newhard, CPA

There is no tax related decision at any level that does not produce winners and losers. Retirees don’t mind EIT because they generally don’t have earned income; high EI earners see big tax without offsetting benefit and are then chastised as the “evil 1%” for their success; property owners have no assurance that any savings will be realized, particularly since the school district needs to plug deficit holes.

In a Commonwealth with a heavy union population, the unfunded pension liability will not likely be reduced — just refinanced and spread over a longer period to create a false sense of short-run fiscal “balance” or “stability.” Future monies likely to come from a fee/tax levied on the Marcellus Shale natural gas exploration are not going to help southeastern PA and will have nominal impact of the state general fund (will certainly be mostly ear-marked for “road & environmental” implications from the drillers.

With a heavy practice in PA local taxes (especially EIT), analyses on tax distributions are quite the challenge, and are always a moving target. As we continuously monitor state budget and fiscal results — don’t look to Harrisburg (or the feds) for a stimulus windfall. In fact, do not be surprised if there might be a sales tax bump with extra bump amount designated/elected to be retained by the county (for example, there may come a day when the sales tax in Chester County is 7% with 6% to the Commonwealth and the 1% staying in Chester County).

Just because you’re paranoid doesn’t mean that someone isn’t out to get you!

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