(MSN News) Child care. Candy. Certain legal services. These goods and services are not subject to the sales tax in Pennsylvania, but under Gov. Tom Wolf’s budget proposal, they and others would be.
His proposal in Tuesday’s budget address that the sales tax not only be raised from 6 to 6.6 percent but also broadened to apply to more purchases has drawn jokes from Republicans that Mr. Wolf, a Democrat, is calling for taxes from the cradle (diapers) to the grave (caskets.)
Mr. Wolf and his aides, meanwhile, have noted that his proposal, part of a budget package that includes an expansive program for property tax relief, has similarities to past Republican property tax efforts, some of which would have taxed the same items.
With the governor looking to pay for automatically increasing expenses like pension payments, provide for reductions in property taxes and meet his campaign pledge to boost education funding, his administration says it is projecting to bring in $1.18 billion by expanding the purchases that are taxed. Aides have said an average family would see its overall taxes drop 13 percent.
Mr. Wolf, a business executive before becoming governor, has described the shift both as a way to generate revenue and as an effort to keep up with the changing economy. “The broadening of the sales tax to services reflects the growing shift to a service-based economy,” his budget book says. “Likewise, outdated exemptions — often protected by special interests — will be eliminated to make the tax system fairer and more consistent with other states.”
And representatives of the targeted goods and services have responded in defense of that tax-exempt status. Kathleen Ryan, general counsel and chief operating officer of the Pennsylvania Funeral Directors Association, said the proposal to begin taxing death care services, caskets and burial vaults would add to an already-expensive — and unavoidable — cost. “People don’t go to funeral directors unless they have to,” she said. “The idea that you’re taxing something that people are struggling to pay for in the first place is hard.”
The plan would tax personal — though not government or business-to-business — use of legal services, other than in criminal or family law. Malcolm MacGregor, president of the Pennsylvania Association for Justice, called such an expansion a “misery tax” on people who are facing foreclosure or who have been seriously injured through the fault of another.
“It’s just another burden that shouldn’t be imposed on them,” he said. “We think it’s terribly unfair, in that regard, when someone’s gone through that level of crisis or stress or misfortune to lay this on them.”
Jeff Beckman, a spokesman for The Hershey Company, whose sweets would become subject to the sales tax, said in an email that the company opposes any proposal “to arbitrarily segregate candy from the broader food category.”
And Ron Barth, president and CEO of LeadingAge PA, which represents not-for-profit providers of senior housing and services, said the proposal would add as much as $6,000 per year to bills for nursing home residents and $3,500 to bills for those in assisted living.
“Most of the people that are receiving these services clearly are on fixed incomes,” he said. “They’re relying on their pensions or savings.”
Matthew O’Connor, who is in charge of operations at Humphrys Flag Company, which says it moved to Philadelphia in 1864, said he does not know whether the proposal to charge sales tax on the Pennsylvania and U.S. flag would affect sales.
“It’s just a nice thing for people who are proud of where they’re from that they don’t have to pay extra,” he said. “The government is saying, yes, we agree with you. We’re glad you’re proud.”
The governor’s proposal would maintain exemptions from the sales tax for purchases including food from the grocery, most clothing and footwear, prescription drugs, gasoline, physician services and residential utilities.
The administration described those exemptions as protections for the state’s most vulnerable residents.
