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PA: Property tax reform plan comes up short

By   /   September 28, 2012  /   No Comments

PENNSYLVANIA lawmakers on Monday will hear a new analysis about plans for property tax reform.

By Melissa Daniels | PA Independent

HARRISBURG —It may be back to the drawing board for proponents of property tax relief.

Estimates from the state Legislature’s Independent Fiscal Office suggest that replacing school property taxes with increases elsewhere won’t be adequate enough to remove school property taxes altogether.

The IFO analysis looked at a tax-swapping proposal in House Bill 1776 and Senate Bill 1400, parallel bills pending in the Legislature.

The legislation would increase personal income taxes from 3.07 percent to 4.07 percent, sales tax from 6 percent to 7 percent, and increase the tax base to an expanded list of goods and services, such as clothing purchases of more than $50.

But  IFO calculations show that the tax swap would fall short in supplying school districts with the same revenue as property taxes, projected to total $12.6 billion in 2013-14.

The legislation would leave Pennsylvania school districts $1.5 billion short in 2013-14 , and $2 billion short by 2017-18, according to the report.

The 88-page report looks at the net effects of the proposal on businesses, individuals, housing and interstate business competition, among other factors.

The Select Committee on Property Tax Reform will meet Monday to discuss the report. The committee, created by House resolution earlier this year, is charged with examining school and municipal property taxes in an attempt to come up with a new system.

It is scheduled to deliver a report recommending potential reform ideas by Nov. 30.

Monday’s committee hearing will also include testimony from the Pennsylvania Realtors Association.

 Contact Melissa Daniels at melissa@paindependent.com

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Melissa Daniels