BORDER WARS
PENNSY PLAN TO HIKE SALES TAX SPARKS FEAR OF SHOPPER EXODUS
Members of the Delaware County business community and elected officials on Wednesday had mixed reactions to a proposed increase in the state sales tax.
On Monday, some details of a budget deal in Harrisburg were announced — and they included an increase in the state sales tax from 6 percent to 7.25 percent to generate $2 billion to be used to fund education. Philadelphia’s sales tax would increase from 8 to 9.25 percent.
According to the Tax Foundation, only California has a higher sales tax rate at 7.5 percent. Five other states — Indiana, Mississippi, New Jersey, Rhode Island and Tennessee — have a sales tax rate that is 7 percent.
Trish McFarland, president of the Delaware County Chamber of Commerce, said she is staying in communication with their business members on the issue.
“We have heard from several of our small business members about concerns with any sales tax increase,” she said. “We have passed on those concerns to our local legislators.”
McFarland said she understands the role the state budget plays for a specific sector of chamber businesses.
“Nevertheless, the end of the budget impasse is critical to our non-profit community, which is an important part of our membership,” she said.
Peter Lustgarten, president of Concordville Nissan and Concordville Subaru, explained that his 25-year-old dealership is less than a mile from the Pennsylvania/Delaware line.
“I just wish the governor rethinks this because ... it’s easy for people to cross the border here,” he said.”People are very cost conscious. If someone buys a car in Delaware, they still have to pay Pennsylvania sales tax. It would affect our parts and service business.”
He said the two dealerships work on 50 repair orders a day.
“On a big service job, if somebody needs four tires, that comes out to be a lot of money in tax,” he said.
With 84 employees, Lustgarten is concerned how any loss of business might impact his ability to keep them hired.
“If we start losing business to business in Delaware, we won’t be able to carry as many people,” he said.
Although his business would remain where it is because of franchise regulations, Lustgarten said not all businesses are bound by the same restrictions.
“We can’t move to Delaware, but a lot of restaurants, they could,” he said.
In addition, he said about 40 percent of his business actually comes from Delaware and that would be in jeopardy should the sales tax rise.
State Rep. Stephen Barrar, R-160, of Upper Chichester, spoke about several considerations surrounding the potential hike.
“If you look at my district, it would be very sensitive to an increase in the sales tax at this point in time,” he said.
Barrar said the proposal details continue to be developed this week and that state House Speaker Mike Turzai, R-Allegheny County, has ordered that legislators work Monday through Thanksgiving to get the budget resolved.
In addition to an increased sales tax, the deal includes some kind of pension reform, property tax relief and liquor privatization, although the specifics are being worked out.
Barrar said he wants to see all of the details and hear from as many constituents as he can before he makes a final decision.
“I’m getting people who are contacting me that are saying I can life with the increase and others send emails extremely angry and disappointed with me,” he
“I just wish the governor rethinks this because ... it’s easy for people to cross the border here. People are very cost conscious. If someone buys a car in Delaware, they still have to pay Pennsylvania sales tax. It would affect our parts and service business.” — Peter Lustgarten, president of Concordville Nissan and Concordville Subaru
said.
However, he is still in deliberation mode.
“I want to be a little bit cautious in what I say,” Barrar said. “There’s definitely some things on the table that could have an incredible impact on Pennsylvania, I think in an incredible way.”
On the other hand, he’s aware of how an increased sales tax could effect businesses in his district.
“We are so competitive with Delaware here,” he said.
Barrar said public input is key right now.
“We have to weight it out very, very carefully,” he said of the overall budget deal. “There’s some good in it and there’s some bad in it and we have to weigh it out.”