Rally Against PA's Budget Cuts
WHAT: Rally Against the PA Budget Cuts
WHEN: Thursday, July 1 at Noon
WHERE: Philadelphia City Hall, Dilworth Plaza (15th Street Side)
Pennsylvania is facing a very difficult budget process. The federal government did not pass HR 4213, which would have increased the percentage of Medicaid that the government would have contributed to Pennsylvania’s budget. Pennsylvania had counted on this money and is now considering further cuts to vital services in order to cope.
The Southeastern PA Budget Coalition is sponsoring a rally at City Hall this Thursday in order to demand that our legislators create strategies to increase revenue, rather than cutting services. We want PA legislators to:
- Tax smokeless cigars and tobacco, which would generate $42 million a year.
- Tax natural gas extraction from the Marcellus Shale, which would generate $160 million a year.
- Close corporate tax loopholes, which would generate $67 million a year.
- Eliminate exclusions in our sales tax (including helicopters and gold coins, which are currently untaxed), which would generate $530 million a year.
The rally intends to show legislators "we care more about home care attendants for people with disabilities, child care centers, schools, literacy, and support for kids with autism than we do about giving tax breaks to big oil and tobacco.
Talking Points:
Southeastern Pennsylvania Budget Coalition
www.pabudgetnow.wordpress.com
WHO WE ARE
The Southeastern Pennsylvania Budget Coalition is a broad-based coalition of over 100 nonprofit, local government and private sector agencies. We provide essential services to improve the quality of life for people in Philadelphia, Bucks, Chester, Delaware and Montgomery Counties.
WHAT WE WANT
The national economic crisis has increased demand for the services we provide to children, families, seniors, people with disabilities and other Southeastern Pennsylvania residents while reducing the availability of private funds that help support these services. Cuts to Pennsylvania’s current budget threaten our ability to meet the needs of local communities. Additional cuts in FY 2011 and in 2012, when federal economic stimulus funds are no longer available, will have a devastating impact and result in permanent damage to the region’s safety net.
We urge the General Assembly to balance next year’s budget not by relying on cuts alone, but by pursuing a balanced approach that also includes enhancing revenue. We urge you to pro-actively address the loss of federal economic stimulus funds before 2012.
Support the Stimulus Transition Reserve Fund
In response to the economic crisis, the federal government provided temporary fiscal relief to states last year through the American Recovery and Reinvestment Act (ARRA). These are scheduled to expire in 2012, when economists predict the worst of the recession will be over. However, Pennsylvania typically recovers from national recessions later than other states. Experts predict we will face a $2.3 billion economic cliff in FY 2012 and an even larger one the year after. To cushion against deep service cuts that would result, the budget proposes to create a Stimulus Transition Reserve Fund. The Fund would raise revenue beginning in 2011 for use after federal stimulus funds end. Components include:
Smokeless Tobacco and Cigars
Pennsylvania is the only state that does not tax smokeless tobacco, which is aggressively marketed to children. Even North Carolina and Kentucky, big tobacco producing states, have this tax. Increasing the cost of smokeless tobacco deters children from taking up the habit, keeps them healthy, and reduces future health care costs.
Only two states do not tax cigars, which are a luxury item. This luxury item should not be exempt from excise taxes that the industry pays in 48 other states.
* We urge you to tax smokeless tobacco and cigars to generate $42 million a year.
Marcellus Shale
All of the states with greater natural gas production than Pennsylvania levy an extraction tax or fee. Our state gives special treatment to natural gas companies by not taxing the extraction. Pennsylvania sits atop what could be the largest natural gas reserve in the country. Most of the gas companies that want to extract natural gas here pay a similar tax when they extract from other states. Pennsylvania is closer to the biggest natural gas users than Louisiana or Texas, and the gas will be much less expensive to ship from Pennsylvania, which is one reason gas companies are flocking here.
* We urge you to tax natural gas extraction to generate $160 million a year in Pennsylvania.
Corporate Tax Loopholes
Big businesses that operate in many states, like Wal-Mart, Home Depot and Toys-R-Us, can hide income they earn in Pennsylvania to avoid paying taxes. More than 70 percent of corporations in Pennsylvania do not pay any income tax, while individuals and small businesses do not have that option. Cutting the overall corporate income tax rate while closing loopholes would bring in money that can help to avoid additional budget cuts and support good schools, high quality universities and human service programs. Most companies will not be affected by closing loopholes, and would benefit from a rate cut.
* We urge you to adopt this proposal to generate $67 million in FY 2011 and significantly more in later years.
Modernizing the Sales Tax
Pennsylvania’s sales tax was developed for a manufacturing economy, not the current service economy. As a result many services that generate substantial sales income are untaxed. In addition special interests have secured exclusions on many items, including helicopters and gold coins, over the years. The proposed budget would eliminate exclusions on 74 goods and services including helicopters and gold coins, while lowering the overall tax rate to 4 percent. The sales tax exclusion for food and clothing would continue.
* We urge you to modernize the sales tax and lower the overall tax rate to generate $530 million a year.
Use a Portion of Revenue from the Stimulus Transition Reserve Fund to Close the Budget Gap in FY 2011
Most of the revenue generated by these measures should support the Stimulus Transition Reserve Fund. However, there is nothing to prevent the General Assembly from using some of these funds to close the anticipated budget gap in 2011.
* We urge you to use some of these funds to restore cuts to essential services in 2011.
Southeastern Pennsylvania Budget Coalition
1709 Benjamin Franklin Parkway, Sixth Floor
Philadelphia, PA 19103
Kate Atkins, Coordinator
sepabudget@gmail.com or 215-563-5848 x16
http://pabudgetnow.wordpress.com