Press Release: PBPC recommends ways to fairly expand Pennsylavania’s sales tax


PBPC recommends ways to fairly expand PA’s sales tax

Urges legislators contemplating an expansion of the sales tax base to prioritize equity for low- and moderate-income families

For details, read the brief online

HARRISBURG, Pa. – Dec. 4, 2015 –  Pennsylvania legislators appear to be focusing on expanding the sales tax base instead of raising the sales tax rate as a way to secure new revenues for the Pennsylvania budget. The Pennsylvania Budget and Policy Center (PBPC) has released a policy brief, “Expanding the Sales Tax in an Equitable Way” that calls for legislators to expand the sales tax in a way that is fair to low- and moderate-income Pennsylvania families.

Marc Stier, director of PBPC said, “New revenues are clearly needed to restore cuts in school funding and health and human services. There are good reasons to broaden the base of the sales tax, if it is done in ways that make the tax more equitable.”

The PBPC policy brief encourages legislators to continue to exclude food, clothing, and health care from the sales tax and to include luxury goods and services such that are more often consumed by families with high rather than low incomes. Stier pointed out that, “It is critical that exclusions from the sales tax be determined by consideration of equity, not by which enterprises have the best lobbyists or other connections to legislators.”

The brief also points out that a broader sales tax is still likely to fall more heavily on low-income families. Stier said, “Legislators can limit the burden on those least able to bear it by coupling the sales tax expansion with a new refundable sales tax credit. A modest sales tax credit could offset the increase in sales taxes paid by low-income families as a result of broadening the sales tax base. A slightly larger tax credit would not only do that, but would reduce the burden of the existing sales tax on low- and moderate-income families, taking an important step toward making the Pennsylvania tax system fairer.”