While many states have finished up their 2014 legislative session, lawmakers are still busy at the state capitol in Pennsylvania working to reach a budget agreement before the the June 30th deadline. The biggest challenge facing the legislature is how to address the state’s $1.5 billion dollar deficit.
Gov. Tom Corbett came out earlier this month and stated that he wants legislators to balance the budget without higher taxes, and he has made clear that he doesn’t even want to consider tax increases before lawmakers address pension reform and get the state out the booze wholesale and retail business once and for all (Pennsylvania is one of only two states that controls alcohol wholesale and retail operations). Privatizing alcohol sales is good politics, with over 60 percent of Pennsylvanians supporting privatization, and it’s also good policy. As ATR’s Patrick Gleason pointed out in a recent Forbes column, ending the Pennsylvania government’s 80 year monopoly on liquor sales would provide enough revenue to enable lawmakers to balance the budget without raising taxes. The Pennsylvania House has already passed legislation, HB 790, to get the state out of the booze business. The only thing holding up this commonsense and long-overdue reform is a lack of political will in the state senate.
ATR recently sent a letter to Pennsylvania lawmakers encouraging them privatize liquor sales. “There are numerous ways to balance the budget without resorting to tax hikes, but one of the best and most fiscally sound ways to work toward that goal is to get the state out of the liquor and wine business,” wrote ATR president Grover Norquist to Pennsylvania lawmakers. “It is estimated that selling off the state run alcohol stores could generate as much as $1 billion in revenue for the commonwealth. Aside from serving as a great way to balance the budget without taking more of Pennsylvania taxpayers’ hard-earned income, privatization is a good idea because wholesale distribution and retail sales of liquor and wine are simply not core functions of government,” added Norquist.
In recent days it has been widely reported, and confirmed by sources in the legislature, that Republican senators are seriously considering passing a budget with higher taxes, with a tobacco tax increase and a severance tax on natural gas as the top tax hike trial balloons currently being floated. Spending interests at the Pennsylvania capitol are pushing to add as much as a 5% tax on shale gas, unconcerned by the fact that it will lead to, as Marcellus Shale Coalition President Dave Spigelmyer puts it, “uncompetitive, shortsighted new taxes on one of our most promising industries and will lead to fewer jobs, lower energy production and less tax revenues.” Others in the legislature, viewing smokers as an easier political target, prefer a tax hike on tobacco products.
One thing is clear, if the GOP-controlled Pennsylvania House and Senate adjourn for the summer having failed to end the state’s liquor monopoly or reform pensions, but having succeeded in raising taxes, they will have an extremely weak case to make on the campaign trail this Fall. Furthermore, if Republican legislators seek to steamroll Gov. Corbett into signing a tax increase five months before his reelection bid, in violation of his central campaign commitment to voters, Republican legislators will have given the perfect gift to the Democratic Governors Association and Democratic gubernatorial candidate Tom Wolf.
Pennsylvania taxpayers have been hit with over 20 federal tax increases in just the last four years, the last thing they need is another job-killing tax increase imposed from Harrisburg. ATR urges Pennsylvania legislators to get the state out of the liquor business once and for all and to balance the budget without higher taxes.
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