Time to Close the Loopholes: Sales Tax Vendor Discount

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Read a Fact Sheet on the Sales Tax Vendor Discount

You may think you’ve heard this story before: The Commonwealth pays $74 million a year to people for work that’s actually done for them by computers and automated cash receipt systems. Truth is, you haven’t because these “ghost employees” don’t work for the state; we’re talking about the tens of millions the Commonwealth pays private businesses each year to handle sales tax receipts and remit them to the state.

You’d likely be outraged if you were told the state had some 1,500 workers who simply stood around and watched computers do their work for them. In reality, that’s how the sales tax “vendor discount” program – conceived back when receipts were tabulated by hand by men wearing green eyeshades and armbands – works out today.

No other Pennsylvania taxpayers receive this kind of tax break. Other employers get no discount for remitting payroll taxes in a timely manner. And you don’t remember getting a discount for filing your personal income taxes on April 15, do you?

Truth is, Pennsylvania is one of only 13 states with an unlimited sales tax vendor discount and it now spends more on the program than all but two states – Texas and Illinois. Amazingly, 10 of our largest retailers split $12 million in discounts in 2007-08.

Isn’t it time to say “no” to “ghost employees” whereever they are in Pennsylvania? Especially when the “ghost pay” goes to giant corporations?