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FOR IMMEDIATE RELEASE |
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State
Rep. Dan Frankel |
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Frankel: Replace counterproductive taxes in budget agreement
with commonsense plans like gas drilling tax, closing tobacco loopholes
HARRISBURG, Oct. 1 – State Rep. Dan Frankel, D-Allegheny, said today he plans to resist counterproductive taxes in the tentative budget agreement and will work to replace them with commonsense revenue sources.
"The House and Senate need to replace proposals like the tax on arts organizations and leasing thousands of acres of state forest land for drilling. Commonsense revenue sources are available to balance the budget, such as ending Pennsylvania's status as one of the few states that doesn't tax natural gas companies on the valuable fuel they extract from our soil, and ending our bizarre practice of being the only state that doesn't tax cigars or smokeless tobacco," Frankel said.
"Remaining the only state to keep cigars and smokeless tobacco tax-exempt would be a windfall for tobacco companies. Because the current budget agreement includes a cigarette tax increase, it would prompt even more young people to damage their health by becoming addicted to smokeless tobacco instead – unless the House and Senate close that tax loophole," Frankel said.
Closing Pennsylvania's tobacco tax loopholes would yield an estimated $38 million to $70 million per year, depending on the way the tax is structured. Frankel's proposal would automatically keep up with inflation and manufacturers' price increases.
"Keeping the tax pegged to price would help to deter young people from these products the way the cigarette tax helps to do now. Ending the Pennsylvania tobacco subsidy isn't just about balancing the state budget – it's about preventing addiction and saving lives," Frankel said. "According to the Campaign for Tobacco Free Kids, Pennsylvania's rate of 16- to 25-year-olds using non-cigarette tobacco is already twice the national average."
Commenting on his other proposed addition to the budget package, Frankel said several other states, such as Ohio and West Virginia, impose a tax on natural gas and other resources extracted from their soil. In 2008, West Virginia collected $524 million in severance tax revenue, according to a study by the nonpartisan Pennsylvania Budget and Policy Center.
"If the House and Senate leave natural gas drilling untaxed, that would be a big giveaway to energy companies at the expense of providing vital services that Pennsylvanians need more than ever during this nationwide recession, and it could leave us without the revenue needed to clean up the damage to our water and land from drilling operations," he said.