Business tax rules targeted
HARRISBURG — After blocking similar efforts by Democrats in recent years, Republicans in Harrisburg now want to chip away at state tax provisions that benefit businesses.
Business advocacy groups are not necessarily supporting the ideas now just because Republicans are getting behind them, and it’s not clear that GOP lawmakers will be able to agree with each other to get them passed, particularly during an election year when no one wants to alienate supporters.
A month-old bill backed by the leaders of the House Republican majority would attempt to close the so-called “Delaware loophole.” It would give the state Department of Revenue the power to stop firms — usually large, multistate companies — from using an accounting sleight of hand to move profits out of Pennsylvania to a lower-tax jurisdiction in order to avoid paying the state’s 9.99 percent corporate net income tax.
To make it easier for business advocates to swallow, the bill would also take major steps long sought by the business community to lower business taxes, including gradually reducing the corporate net income tax rate to 6.99 percent in 2019.
At the same time, the Corbett administration wants to scale back part of an approximately $73 million incentive for retailers that collect the sales tax and send it to the state in a timely fashion.
Neither seems to be embracing the other just yet, and the turf gets tricky for Corbett, a Republican who campaigned on a vow not to increase taxes and who counts business owners and executives among his strongest supporters.
A spokesman for the House Republicans, Steve Miskin, said Friday that the group had not yet taken a position on the governor’s proposal, which was included in the budget plan Corbett unveiled Feb. 7.
Under the proposal, retailers that get to keep 1 percent of the sales tax money they collect would now be allowed to keep no more than $250 per month, which would bring another $41 million to the state in the fiscal year that begins July 1.
During Tuesday’s Senate Appropriations Committee hearing, Sen. Jim Ferlo, D-Allegheny, asked whether that change is a tax increase. Revenue Secretary Dan Meuser responded that it is a “modernization.”
Asked about the House bill to close the “Delaware loophole,” on Thursday, Corbett said he hadn’t seen it, hadn’t talked to House leaders about it and couldn’t say whether he would support it.
