From the Desk Marty Qually
Candidate for State Representative

(5/18) One of the most important concerns facing Adams County residents is increasing property taxes, especially school taxes. When I speak with voters, they mostly fall into one of two categories, they are either against property taxes or they are really against property taxes. A current proposal to eliminate school taxes is House Bill 76, the Property Tax Independence Act. I wish that I could say the title of the bill says it all, but like many complicated issues, the devil is in the details. This bill makes big promises, but it is mostly smoke and mirrors. If approved, this bill will shift taxes away from businesses and on to residents, take control away from local government, relies on some questionable math, solidifies an out-of-date state school funding formula, which hurts Adams County schools, and may end up increasing Adams County taxpayers’ total tax burden. There are ways to improve our tax system and fairly pay for schools, and while this bill is not the solution, it does contain some items worth discussing in more detail.

Representative Cox introduced this latest tax elimination act on May 3, 2017 with a memorandum stating, "The Property Tax Independence Act will eliminate all school property taxes across the Commonwealth (with the exception of those retained to retire current debt) and will replace those taxes with funding from the Personal Income Tax and the Sales & Use Tax."

Sounds simple enough, PA will increase Personal Income Tax (PIT) and Sales and Use Tax and that will offset the revenues lost from property taxes. State government would then use those funds to pay schools for their services. The proposal is to increase sales and use tax by one percent and to increase the items subject to sales tax. The increase is sales tax is simple enough; it would go from six to seven percent. Where it gets complicated, is the number of new items that would now be available to be taxed. Here is the list of new items to be included in the higher sales tax: food (Items not on WIC food list), candy and gum, personal hygiene products, storage, newspapers, bad debt, magazines, UCC filing fees, clothing and footwear (individual items $50 and higher), call center tax credit, non prescription drugs, rental of films for commercial exhibition, airline catering, investment metal bullion and investment coins, charges for returnable containers, catalogs and direct mail advertising, caskets and burial vaults, construction of memorials, flags, horses, hotel permanent resident, textbooks, liquor or malt beverage purchased from retail dispenser, coin-operated food and beverage vending machines, and commission - SUT collectors (capped at $250/month). That is not a small list and everyone will be hit with a larger sales tax.

The services that will be added to the increased and expanded Use Tax will include: dry cleaning and laundry services, personal care services, funeral parlors, crematories, and death care services, all other personal services, spectator sports admissions (excludes schools), theater, dance, music and performing arts, amusement and recreation industries, museums, historical sites, zoos and parks, transit and ground transportation, air transportation, truck transportation, other transportation, legal (except business-to-business, domestic relations matters and criminal defense matters), architectural, engineering and related services (except business-to-business), accounting, auditing and bookkeeping services (except business-to-business), specialized design (except business-to-business), all other professional and technical services (except business-to-business), basic TV, veterinary fees (except business-to-business), finance and insurance, waste management and remediation, recreational parks, camps & campgrounds, custom programming, design and data processing (except business-to-business), and parking lots and garages. Again, that is a lot of new items that will be taxed, but notice how many of these services are listed as "except business-to-business".

Basically, the changes to sales and use tax side will shift the property tax burden from businesses and residents to just residents. Business properties account for a large amount of property taxes in Adams County. I fully support that government has a role in assisting businesses succeed, but to me it’s about infrastructure creation, not a wholesale shift away from property tax. Property taxes pay for services that benefit businesses, they can help to pay their fair share. Also, keep in mind that businesses do not pay sales tax on items for resale. Sales tax is paid by the final consumer, us.

I agree with the drafters of this bill that we need to have a discussion about which items and services should be taxed, but this should occur separate from the school tax discussion. Part of the Sales and Use tax increase argument is that it more reliable than property tax. I don’t know about you, but on a personal level, I started to think about how I would change my purchasing habits to avoid items on these lists. On a larger scale, we could also see some significant local industries experience significant cost increases, namely, our tourism attractions, equine industry and campgrounds. I would anticipate that some businesses would close or relocate to other states with better tax laws. The risks on changing so dramatically from property tax to sales and use tax is too untested to take such a large leap.

The second major change for this bill will be an increase of the Personal Income Tax (PIT) from 3.07% to 4.95%. The average household income for Adams County is about $60,000. The average family’s PIT tax would go up from $1,842 to $2,970, and increase of $1,128. No matter where you live, this increase tax will offset some of your school tax savings. The good news is that this portion of the bill is pretty straight forward.

Yet again our legislators, including this district’s 12-year incumbent, are making promises that sound good, but may end up costing us more. I believe that our legislators need to focus on PA paying our schools their fair share and let us decide how to raise local funds. Let’s have a discussion about fixing the exceptions to sales tax, but let’s also have a discussion about counties deciding if a sales tax increase is a good form of local school funding. And finally all of these proposed changes, presuppose that when we send our money to Harrisburg that we will get it back. Sorry, I’m not buying it. Everytime Adams County taxpayer money goes to Harrisburg we get less back. The only thing that we need to send to Harrisburg is change. If you want to see change in Harrisburg, vote for me on November 6th.

As always, feel free to email me at martyqually@gmail.com or on my personal cell phone at 717-339-6514. The best way to learn about my campaign is by joining us on facebook at www.facebook.com/martyqualy