Whether a tax or fee, revenue is needed

December 12, 2012

A recent story in this newspaper detailed a political debate about whether Gov. Tom Corbett has violated his pledge not to raise existing taxes or impose new ones.

The Associated Press piece suggested that it’s not a black-and-white issue, but the real question is whether politicians ought to be making such promises when they have no idea what challenges or crises might face them down the road.

Corbett’s supporters have argued that his signature on the law authorizing counties to impose fees on gas-drilling companies did not count as a tax, but we would beg to differ. The governor can call it a fee if he likes, but if it walks like a duck and talks like a duck ...

One of the more disingenuous arguments, which was presented in the AP story by Matthew Brouillette of the anti-tax Commonwealth Foundation in Harrisburg, is that the state government – and, by extension, the governor – was not really imposing a tax (or fee) on the drilling industry because it is the counties that make the ultimate decision on whether to pursue the money from the Marcellus folks. Yeah, like those counties, facing their own budget constraints, are going to turn down millions of “free” dollars.

Brouillette would not, however, go so far as to suggest that imposition of such fees or taxes do not eventually fall on the average citizen.

“There is no way to tax the guy behind the tree and think it will not affect me,” he said.

Now, it appears that the governor’s people are talking with state legislators about removing the cap on a wholesale tax paid by gasoline stations. The money from that tax goes toward improvements on roads and bridges, and Pennsylvania certainly has pressing needs in the area of transportation infrastructure.

The AP report said Corbett commented recently that the tax cap is “artificial” and that it wasn’t likely the gas stations would pass an increase on to consumers. Riiiiiiiight. Again, a tax is a tax, even if you try to call it a fee. And, as with the gas drilling tax, eventually the consumer is going to pay for it.

Rep. Michael Sturla, D-Lancaster, who leads the House Democratic Policy Committee, said he would be fine with lifting the cap on the oil company franchise tax, with one condition.

“I’ll go along with it not being a tax increase,” he told the AP, “if every time a Republican attacks a Democrat (for their vote), the governor shows up and stands with the Democrat and says, ‘Absolutely no way did they ever do that.’”

We would advise Sturla not to hold his breath on that one.

The commonwealth has tens of thousands of miles of crumbling roads and literally thousands of structurally deficient bridges. They are incredibly expensive to repair, and the current revenue stream for such work is woefully insufficient.

The answer, of course, is to find additional revenue. There have been suggestions that privatizing the state liquor stores could provide an immediate infusion of capital to address the infrastructure projects, or other state needs. Removing the cap on the oil company franchise tax could raise an estimated $1.5 billion annually, according to the AP report. But more will be needed, and the governor and Legislature would be shortsighted if they did not at least consider other “revenue enhancements,” including an increase in driver’s license and registration fees.

Ultimately, the folks in Harrisburg should not be splitting hairs over whether something is a tax or a fee, but whether such revenue is necessary for the state to meet its obligations.



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