Pennsylvania Official Touts Slot Plan

Every Pennsylvania homeowner would be eligible for property tax relief under Governor Edward G. Rendell's proposal outlined today in Wilkes-Barre by Secretary of Revenue Gregory C. Fajt.

Fajt said limited slots gaming approved last year would generate $1 billion for statewide property tax cuts beginning in 2007. In Luzerne County, homeowners would receive an average of $213 in property tax relief under the Governor's proposal.

Governor Rendell has asked the General Assembly to amend Act 72, the legislation that will implement property tax relief, to remove language giving school boards the power to decide if gaming revenue is used to reduce property taxes in their district.

"Rising property taxes are a problem for all Pennsylvania homeowners," Fajt said, "but they are especially burdensome for older Pennsylvanians and others living on fixed incomes.

"This is the best and easiest way to give money back to property owners who want relief from rising taxes," Fajt said. "The money is there. School boards should not be able to say no to $1 billion in school property tax cuts."

Governor Rendell called a special session of the General Assembly, beginning Sept. 28, to specifically focus on providing tax relief for tens of thousands of Pennsylvania homeowners.

Fajt said Governor Rendell also wants to eliminate the mandatory Earned Income Tax increase that was part of Act 72, but wants to retain a back end referendum that gives taxpayers greater control over school tax increases.

"If a school board wants to enact a significant tax increase, it should be willing and able to justify the increase to its taxpayers," Fajt said.

Under the Governor's proposal, school boards would also be able to ask taxpayers to decide if they want to increase local income taxes to pay for additional property tax cuts.

Fajt also addressed proposals that would expand Pennsylvania's sales tax and use the additional revenue to eliminate school property taxes. He said the Department of Revenue has conducted a detailed analysis of the most prominent proposal, offered by a group of legislators that call themselves the Commonwealth Caucus.

"The Commonwealth Caucus plan doesn't add up," Fajt said. "It would raise $5.6 billion in new taxes, but the Caucus needs about $10 billion to eliminate all local school taxes."

The Caucus would have to raise the sales tax to 6.65 percent to balance according to a recent analysis by the Revenue Department. But Fajt said that raising enough revenue is not the only issue with the Commonwealth Caucus' plan.

"The sales tax is already one of the most regressive taxes," Fajt said. "The Commonwealth Caucus and other proponents of an expanded sales tax would make the sales tax more regressive by taxing food, clothing, water, electricity, home heating oil and other basic necessities.

"Lower income Pennsylvanians would suffer under the Commonwealth Caucus plan, especially those who rent because they would not be eligible for property tax relief."

Businesses would also suffer, Fajt said, because the expanded sales tax would tax legal, accounting, computer, consulting and other services primarily used by businesses. He said it would even tax college tuition as an "educational service."

Fajt said Governor Rendell's gaming-based property tax cut proposal is a better alternative, and urged the Commonwealth Caucus and other legislators to support the Governor's amendments to Act 72.