Last week, lawmakers and the governor agreed to a $31.6 billion budget, a five percent increase in spending from last year and the largest one-year jump in spending since 2006.
To pay for this massive spending increase, lawmakers now say they must go beyond the taxes already on the table, like the tobacco tax. They’re considering resurrecting a tax eliminated 16 years ago—the natural gas gross receipts tax, or a tax on natural gas home-heating. They say this tax will bring in $350 million next year.
The plan under consideration would apparently extend its reach to natural gas users, which were specifically exempted from the gross receipts tax in 2000 as part of a larger, market deregulation move.
Gross receipts taxes appear to be a tax on large companies, but they are really a broad-based tax on consumers. Like sales taxes, they particularly target low-income earners. It’s little wonder economists agree they belong “in the dustbin of tax history.”
If lawmakers are serious about avoiding broad-based taxes, they should reject any tax that would increase heating costs for 2.7 million families, seniors, low-income households, and small businesses.
Resurrecting this harmful tax will not make large Marcellus Shale drilling companies pay their “fair share.” Instead, it will unfairly hit Pennsylvanians’ heating bills, because tax is levied on natural gas distributors, not producers.
What’s more, the random list of the services and products subject to a gross receipts tax shows it’s nothing more than a revenue grab.
For example, the tax is levied on steamboat transportation companies, mobile telecommunications companies, electric companies and managed care companies.
Reviving the natural gas gross receipts tax has nothing to do with closing corporate loopholes, improving the health of the commonwealth, or simplifying taxes. It’s about scrambling to force Pennsylvanians to pay for unsustainable and unnecessary government spending growth.
Taxpayers deserve more from Harrisburg than a last minute ploy to impose broad-based tax hikes.