House committee approves Rendell revenue plan - minus sales tax

Late Tuesday - when all of Harrisburg was focusing on Gov. Rendell's transportation address to the General Assembly - the House Appropriations Committee quietly passed a bill containing most of the governor's revenue-generating proposals.

In a party line vote the Democratically-controlled House committee approved legislation (HB 2435) that would:

Eliminate the one percent vendor sales tax discount which has allowed sales and use tax licensees to claim a discount upon timely remittance of sales and use tax returns.

Close the so-called "Delaware loophole" that has allowed corporate taxpayers to avoid certain state taxes by locating business addresses in Delaware.

Impose a first-ever tax on cigars and smokeless tobacco at a rate of 30 percent on the purchase price charged to the retailer.

Impose a new "severance tax" on natural gas extraction at a rate of 5 percent of the value at the wellhead plus 4.7 cents per 1,000 cubic feet of natural gas extracted.

All told the new taxes would bring in $300 million in the first year, according to Rep. Dwight Evans (D., Phila.), the chairman of the House Appropriations Committee - not enough to close the $1 billion-plus gap but enough to make a dent. Evans says he expects a vote by the full House by the end of May.

A not insignificant omission. Not included was Rendell's proposal to reduce the state's sales tax (from 6 percent to 4 percent) but expand it to include 74 items and services not currently taxed - an idea that garnered little support from either party in the legislature.



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