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Senate Approves Sweeping Tax Cut
Package
Amended HB 515 benefits real
people and small businesses
HARRISBURG -- A sweeping tax cut plan
developed by Senate Republicans to provide more than $280
million in relief to real people and small businesses
cleared the Senate today and is headed to the House of
Representatives for concurrence.
"These tax cuts are major
components of the Playbook for Progress, the legislative
agenda that Republicans unveiled earlier this year. We made
a commitment to the people of Pennsylvania to work toward
reducing taxes, while spurring economic development and job
growth. The provisions of House Bill 515, as amended,
fulfill that commitment," said Senate Majority Leader David
J. Brightbill.
A key component in HB 515 is
a two-step reduction in Pennsylvania's Personal Income Tax,
which is levied on individual wage earners and small
businesses in the Commonwealth.
"There are two proven ways
to harness state government and help the job climate. One
is to put effective controls on state spending, and the
other is to cut taxes that are too high or that work against
competitiveness. This package, combining tax relief for
families and job creators, is consistent with the views of
our citizens and the needs of our economy," said Senate
President Pro Tempore Robert C. Jubelirer.
The tax reductions included
in HB 515 would be implemented in two phases over two fiscal
years.
The first phase, set for
2006-07, would reduce the PIT rate from the current level of
3.07 percent to 3.03 percent, which would provide $120
million in savings for individual taxpayers and small
businesses. Under phase two, set for 2007-08, the PIT rate
would drop from 3.03 percent to 2.98 percent, which would
provide an estimated $160 million in savings for individuals
and small businesses.
The tax cuts were included
as an amendment to HB 515 offered by Senator Robert J.
Thompson, Chairman of the Senate Appropriations Committee.
"The PIT reductions will
put money back into consumers' pockets and into the ledgers
of small business, both of which represent significant
catalysts in promoting economic growth. Healthy economic
growth is essential for Pennsylvania's fiscal future,"
Senator Thompson said.
In addition to the PIT cuts,
HB 515 would promote economic growth and job creation
through a package of $325 million in tax cuts on job
creators over the two-year period.
"Pennsylvania has been
called unfriendly to business since its tax structure
stifles economic growth and is a detriment to our efforts to
attract new companies. We must turn that around. By cutting
these taxes, we send a message that Pennsylvania is a good
place to live and do business. We must foster growth and job
development or face a bleak economic future," Senator
Thompson added.
The business tax cut package
includes an expansion of the Net Operating Loss cap to $20
million and a reduction in the Corporate Net Income Tax rate
from 9.99 percent to 9.59 percent in 2007-08.
The Senate Republican
initiative to cut taxes follows last week's passage of
legislation that would limit state government spending and
set aside surpluses in a new fund to reduce the PIT.
Senate Bill 4, the Taxpayer
Fairness Act, would hold state spending increases to
inflation by statute. A companion measure, Senate Bill 884,
would make the spending limits part of the state
constitution. The bills would set aside half of surplus
revenues in the state's Rainy Day Fund for use in times of
economic necessity and half in a new Taxpayer Fairness Fund
to reduce the PIT.
  Jubelirer
Browne
Regola
Thompson
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