Click here to subscribe today or Login.
LA PLUME — Pennsylvania already is a tough place to do business and if Gov. Tom Wolf’s proposed tax increases pass it will be a lot tougher, panels of business owners and groups representing them told lawmakers Thursday at a hearing on jobs and the economy.
The panelists shared their concerns with Republican legislators and members of the state House of Representatives Majority Policy Committee on the well-publicized proposals of increasing the sales and personal income taxes and enacting a severance tax on natural gas to the lesser known bank shares tax hike.
With the June 30 deadline approaching for passage of the Democratic governor’s proposed $33 billion budget, lawmakers convened for the second time in two weeks at Keystone College to hear from business owners large and small. The worrisome tone expressed at the energy forum on May 14 carried over into the committee’s hearing chaired by Rep. Kerry Benninghoff, R-Bellefonte.
David Taylor, president of the PA Manufacturers’ Association, delivered harsh criticism of the governor’s budget proposals labeling them a “litany of bad ideas.”
He explained that the governor’s plan calls for increasing the bank shares tax to 1.25 percent from 0.89 percent and reaching back to 2012. The tax penalizes the banks for complying with a federal mandate requiring them to have larger reserves on hand, he said
“Any retroactive tax is just bad,” Taylor said.
The tax would reduce banks’ lending ability by $3.8 billion between 2012 and 2017, added Neal Lesher, legislative director of the National Federation of Independent Businesses in Pennsylvania. As a result, small business would have a harder time getting loans for expanding and working capital, he said.
Bill Banta turned to a private lender for his business Rowland Pennsylvania Produce Hydroponic Farm in Wyoming County. He was unsuccessful in his attempts to work with government-sponsored programs and he bristled when the state gave approximately a half million dollars to a Michigan company to set up a hydroponic operation in an empty factory.
The Michigan company promised to employ 100 people but folded within a year, Banta told the lawmakers. “I think we need to do a better job at giving money out,” Banta said.
The proposed increase of the sales tax to 6.6 percent from 6 percent threatens the future of the graphics business at the Twin Stacks commercial complex in Dallas, said manager Lynn Banta. The firm serves newspapers across the country and competes with companies from India for the work, she said.
It’s not competition but rather an attack from the Organization of Petroleum Exporting Countries on the shale gas industry in the United States, according to Taylor. OPEC “is keeping the spigot open to drive down (oil) prices,” he said.
The Marcellus Shale has benefits far beyond the well pads, in terms of businesses created in the supply chain, Taylor said. But there’s more waiting in the wings if the natural gas drilled in the state can be used for manufacturing, he said.
“We risk forfeiting all that if we don’t have a pro-growth, pro-energy policy regimen for the (natural gas) industry,” Taylor warned.
Procter & Gamble in Mehoopany uses the gas from wells drilled on its property and adjoining land to make its products, said spokesman Alex Fried. The company sells some of it back on the market and invested more than $50 million for a gas-powered turbine to produce electricity, some of which also is sold back to the electric power grid. But energy itself won’t attract industry to Pennsylvania, he said, adding, “You’ve got to have a package deal.”
Jeff Nichols , a certified forester for Deer Park Lumber near Tunkhannock, voiced his opposition to the governor’s proposed 5 percent severance tax. The owners of the lumber company also own Endless Mountain Energy Services which supplies water to the natural gas drilling industry. But Nichols encouraged the lawmakers to think before imposing more regulations on industry.
“A good idea means more and more paperwork and more expenses,” Nichols said.
Rep. Karen Boback, R-Harveys Lake and deputy chair of the committee, thanked the panelists and said, “We need to look at how we can address those concerns.” The hearing, the seventh of nine scheduled cross the state, was recorded and will be made available to House members.