Three Pennsylvania pro-tax, pro-government subsidy of special interest groups issued a statement calling for state taxes on natural gas extraction and on cigars and smokeless tobacco. There statements suggest state lawmakers “focus on closing special interest tax breaks.”
But the lack of a tax unique to that product isn’t a tax break.
A tax break is when specific companies, or industries, or individuals are exempt from taxes everyone else pays. An example is the film tax credit. Another example is the helicopter exemption in the sales tax, which was included in last year’s budget deal (which these groups applauded). Another big tax break is tax credits for alternative energy – to specifically favored companies, or to individuals who buy “green” products. Of course, these groups aren’t decrying those sorts of tax breaks – certainly not since PennFuture is bankrolled by the green lobby.
Put another way, these pro-tax groups are actually calling not for a repeal of tax breaks, but new taxes selecting a narrow and specific group of taxpayers – folks they don’t particularly like. Natural gas companies are subject to every tax (Corporate or Personal Income Tax, Capital Stock and Franchise Tax, etc) other companies are. Likewise, tobacco products are already subject to Pennsylvania sales tax. What these proposal are to create taxes no other companies pay. No other producer – not even coal – pays a severance tax. And obviously an excise tax on cigars and smokeless tobacco affects only those who buy, sell and produce those products.
As Matt Brouillette pointed out in his commentary on special interests, Gov. Rendell and allies like these want to tax those special interests they don’t like, to give grants and tax favoritism to those they do.