FOR
IMMEDIATE RELEASE
7/01/04
Back
Senate
approves Capital Stock and Franchise Tax cut
proposal would save $18 million, could spur economy, job growth
The Senate unanimously
approved Senate Bill 1155, legislation to reduce the state's Capital Stock
and Franchise Tax as a way to promote economic growth and job creation.
"In the last fiscal
year, we pushed back the elimination of the Capital Stock and Franchise
Tax by two years in order to balance the General Fund Budget," said
Senator Pippy R-37th District and a co-sponsor of the bill.
"With the current revenue surplus in excess of $600 million and
increasing, it is time to again think about phasing this tax out. We have
seen in the past that this tax has a negative impact on economic growth
and jobs."
Reducing the Capital
Stock and Franchise Tax has been a priority issue for Senate Republicans
as a way to reduce the burden placed on businesses that limits their
ability to expand and hire staff. A hike in the rate to 13 mills in 1991
under then-Governor Robert Casey has been suggested as one of the major
reasons for the closure or relocation out of Pennsylvania by many
companies and the resulting loss of thousands of jobs. It has also been a
major impediment to the attraction of new companies.
Currently,
Pennsylvania's Capital Stock and Franchise Tax rate is 6.99 mills. The
measure would lower the Capital Stock and Franchise Tax rate to 5.5 mills
for tax year 2005 and to 4 mills for tax year 2006. Under current law,
the tax rate for 2005 will be 5.99 and 4.99 mills in 2006.
"By increasing the phase
out by one-half mill for the next two calendar years, we will hasten the
phase out to 2009 instead of 2010," Senator Pippy said. "The bill would
decrease the tax burden on businesses by $18 million for the next fiscal
year. This will allow for business investment and the creation of
additional jobs."
The legislation now goes
to the House for consideration as part of the General Assembly's
deliberations to craft a state budget for Fiscal Year 2004-05.
Contact: Matt Campion, (412) 262-2260
