PA Environment Digest

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$1.3 Billion Tax/Revenue Package Now Law

The House voted 116 to 75 and the Senate 28 to 22 Wednesday to approve the biggest part of the $1.336 billion revenue package-- House Bill 1198 (Barrar-R-Delaware) amending the Tax Code-- and Gov. Wolf signed it into law a short time later.

The bill includes $709.3 million in non-recurring revenue and $609.3 million in additional revenue sources.

Among many other provisions, the bill authorizes a $5 million increase in the transfer of cigarette tax revenue to the Agricultural Conservation Easement Fund, exempts land transfers to or from conservancies and transfers involving conservation easements from the Realty Transfer Tax (page 47) and creates a new Coal Refuse Energy and Reclamation Tax Credit Program (page 111).

Gov. Wolf said on signing the bill, “Over the last several months, I have worked together with Republicans and Democrats to achieve major progress on issues including the legalization of medical marijuana, the passage of historic liquor reform, and the enactment of a fair funding formula that ensures basic education funding is distributed to schools based on a district’s unique needs.

“Recently, we also came together to pass a budget that included historic investment in education at all levels and much-needed funding to combat Pennsylvania’s heroin crisis. Today’s passage of a revenue package means that we avoid another lengthy impasse, our budget is balanced this year, and we have greatly reduced the commonwealth’s structural budget deficit. I will sign this revenue package.

“This package is an important step forward and includes sustainable, recurring revenue that makes significant progress toward reducing our structural deficit. When I took office, I inherited a deficit of more than $2 billion and schools that were devastated from drastic funding cuts.

“I have fought hard to turn things around and move the commonwealth forward. We have made progress – our schools have seen historic funding increases and the deficit has been significantly reduced. We still have much work to do in next year’s budget, and I look forward to continuing to work with legislative leaders on important issues facing Pennsylvania.

“Now that this year’s budget is complete, it is imperative that we all continue working together to focus on our greatest public health crisis – Pennsylvania’s opioid abuse and heroin use epidemic. While the budget allows us to expand treatment for individuals suffering from addiction, we can and should do more to address this matter that is plaguing all of our communities. My administration will keep its focus on this issue and I will continue preparing for the upcoming special session.”

The House/Senate Conference Committee report on House Bill 1198 (Barrar-R- Delaware) amends the Tax Code to make a series of changes and enact new taxes, including--

-- $431.1 million: Cigarette Tax - $1/pack increase

-- $48.2 million: New tax on smokeless tobacco

-- $13.3 million: E-Cigarettes - 40 percent rate on wholesale prices

-- $3.1 million: Roll-Your-Own Cigarette Tax - 40 percent tax rate on wholesale prices

-- $46.9 million: Digital Downloads (software, streaming videos & satellite radio)

-- $15.8 million: Personal Income Tax imposed on PA Lottery winnings

-- $100 million: Expansion of Gaming (although no gaming legislation has passed yet)

-- $37 million: Balance transfers from certain funds (Fiscal Code bill)

-- $100 million: Tax Amnesty

-- $149 million: Liquor Reform

-- $28.5 million: Tobacco Settlement Fund-Attorney General Settlement

-- $55.5 million: Cap Vendor Sales Tax Discount at $300/year [Caps the sales tax vendor discount at $25 for monthly filers, $75 for quarterly filers and $150 for semi-annual filers. In each case, the discount cap amounts to $300 per year.]

-- $23.5 million: Bank Share Tax - Increase rate from 0.89 percent to 0.95 percent & clarifications

-- $16.8 million: Table Games 2 percent tax increase

-- $24.8 million: Table Games License Fee

-- $20 million: Volkswagen Settlement

-- $200 million: Loan from other funds (Fiscal Code bill)

-- $25 million reduction in Education Improvement Tax Credit

Tax Credit Programs

The bill also makes changes to several tax credit programs for FY 2016-17--

-- NEW. Coal Refuse Energy and Reclamation Tax Credit - $7.5 million

-- City Revitalization and Improvement Zone - $2.5 million reduction

-- Repeals Promoting Employment Across PA Tax Credit - $5 million reduction (eliminated)

-- Reduces Cap on the Keystone Innovation Zone Tax Credit - $10 million